German purchasing managers’  index for the manufacturing sector for March fell from growth territory according to Markit. IT fell to 48.9 points. Also the services sector disappointed with a drop to 51.6 points. Manufacturing PMI was expected to rise from 50.3 to 50.8 and services was expected to advance from 54.1 to 54.9 points, both above the 50 point mark separating growth and contraction.
EUR/USD traded around 1.2930 before the publication and is now below 1.29. Support at 1.2880 is holding on so far.
Earlier, Markit reported disappointing PMIs for France, the euro-zone’s second largest economy. Manufacturing PMI remained unchanged at 43.9 instead of rising to 44.4. Services PMI fell from 42.7 to 41.9 points, considerably lower than 44.1 that was expected. These are very low numbers: the composite output index stands at 42.1 in March, a 4 year low.
Support appears at 1.2880, followed by 1.28. Resistance is at 1.2960. For more lines and analysis, see the EURUSD forecast.
The data shows that confidence is eroding once again. PMIs are forward looking indicators. The consensus is that Germany returned to growth back in Q1 after a sharp contraction in Q4 2012, and avoided a recession. These figures put the assumption in some doubt.
The Italian elections and perhaps even the Cypriot crisis played a part in the drop in purchasing managers’ sentiment.
