The Euro zone's private sector kept expanding moderately in April, but failed to gather momentum. The Markit Composite PMI, a forward-looking reading tracking development in the Euro bloc's manufacturing and services sectors came in at 53.0 in the reported month, down from 53.1 seen previously, when it rebounded from February's 13-month low. The manufacturing PMI declined to 51.5 in April, compared with 51.6 in the preceding month, while the services sector gauge rose to 53.2, slightly ahead of 53.1 in March, but undershooting economists' expectations of 53.3. The Euro zone's economic growth continued to be weak as the bloc's GDP expanded 0.3% in the final three months of 2015 on a quarterly basis, the same pace as in the three months through September. For all of 2015, economic output of the 19 countries using the Euro was up by 1.6% year-on-year. Business activity in Germany, the Euro zone's number one economy, decelerated more than expected in April. Markit's Composite PMI for Germany dropped to 53.8, down from 54.0 in March, which was the lowest level since September 2015. Economists, however, had expected acceleration to 54.2 in the reported month. Germany's manufacturing gauge climbed to 51.9, up from 50.7 in March, while the services PMI unexpectedly dropped to 54.6, down from 55.1.
Activity in the US manufacturing sector unexpectedly declined in April, showing it's weakest upturn since September 2009. Markit said that its flash manufacturing PMI for April fell to 50.8, the lowest level since September 2009, from the previous month's final reading of 51.5, missing expectations for a gain to 52.0. Softer output and new business growth along with a weaker increase in employment were the main factors weighing on the index. The US manufacturing sector had been undermined by the strong Dollar, sluggish global growth and excess supply. The data extend a streak of increasingly disappointing fundamentals that have prompted Wall Street analysts to sharply lower their expectations for GDP growth early this year. Few expect the economy to grow even as little as 1% after an already disappointing end to 2015. Fed policy makers are expected to keep interest rates steady when they meet this week, but may tweak their description of the economic outlook to reflect more benign conditions, leaving the door open for future rate rises. Though the economy is creating jobs and consumer prices have climbed, providing support for a Fed interest rate hike, weakness in retail sales and international trade, as well as concern about China's economy, are among reasons Fed Chair Janet Yellen will remain cautious about further rate hikes before the second half of the year.
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EUR/USD at 4-week low, supported by 1.1220
Last Friday the EUR/USD pair traded down and closed at the 1.1220 mark, posting a more than 60-pip daily slump. Short-term upward correction seems very possible, as the exchange rate has neared the bunch of supports around 1.12, namely the monthly pivot point and 55-day SMA. They are followed by the lower Bollinger band and weekly S1 at 1.1173 and 1.1161, respectively. Intraday dips below here would put at risk the area around 1.1065 (200/100-day SMAs). Meanwhile, on the topside the closest resistance is the weekly pivot and 20-day SMA at 1.1279/88.SWFX sentiment on EUR at 4-week high
Spreads (avg,pip) / Trading volume / Volatility
Average forecast says EUR/USD will trade near 1.1175 by July
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between March 25 and April 25 expect, on average, to see the currency pair around 1.1175 by the end of July. Though 57% of participants believe the exchange rate will be generally below 1.12 in ninety days, with 43% alone seeing it below 1.08. Alongside, only 24% of those surveyed reckon the price will trade in the range between 1.12 and 1.18 on July 31.