"The eurozone manufacturing economy is undergoing its strongest growth period for two-and-a-half years, since the mounting uncertainty caused by the escalating sovereign debt crisis hit businesses hard in 2011"
- Chris Williamson, chief economist at Markit
Following disappointing inflation and unemployment data last week, the single currency received a lift from manufacturing and sentiment reports that both pushed the most traded currency pair 0.14% higher. Business activity in the 17-nation area that has Euro in circulation recorded a slight improvement last month, as manufacturing PMI rose to 51.3 points in October, up from 51.1 a month earlier, in line with analysts' forecasts. The reading that is unchanged from the flash estimate is a good sign for Europe, as it signals improvement in manufacturing across the whole region for the fourth month in a row. Moreover, a pickup in manufacturing in such countries like Spain, Italy and Ireland are suggesting structural reforms, which were implemented via tough austerity measures, are finally starting to pay off. Also Monday Sentix research group said that sentiment across the Eurozone unexpectedly jumped in November, hitting the highest since May 2011, recovering from a blip a month earlier caused by a government shutdown in the U.S. A measure that tracks morale in the Eurozone jumped to 9.3 from 6.1 in the prior month.
Despite positive data, the single currency is expected to remain under pressure until Thursday, when the ECB would decide whether to cut the benchmark interest rate or implement any other tools to assure sustained recovery.
© Dukascopy Bank SA