- Michael Hewson, senior markets analyst at CMC Markets
Draghi was right, once again. During the last ECB meeting he noticed the 17-nation bloc should prepare for another period of subdued growth and weak inflationary pressure. The recent adjustment to ECB's monetary policy seems justified as business activity in the region plunged once again in November. The composite Eurozone PMI eased to 51.5 this month, from 51.9 in October, and falling short of analysts' expectations for a pickup to 52.0. Even though, the figure is still above the 50 threshold, economists warned the index is slipping in the wrong direction, particularly following weak Q3 growth data. While manufacturing PMI improved to 51.5 from 51.3, activity in services sector slowed, with corresponding gauge falling to 50.9 compared with 51.6 in October.
Market reaction, however, was tepid, as EUR/USD first plunged to 1.3399 following weaker-than-expected French manufacturing data, while later, on the back of strong PMI from Germany, the pair climbed higher to 1.3441. The latest data indicates that Germany still remains Europe's powerhouse, with manufacturing PMI expanding for the fifth straight month.
Another important indicator to pay attention to is the employment index that stood at 49.1 from 48.8 in October, suggesting factories cut staff at a slightly slower pace.
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