Euro spikes after strong Eurozone manufacturing PMI data
The euro rose today after the impressive manufacturing data from Europe. According to Markit, the Eurozone’s manufacturing PMI rose to 54.4 in October as demand for manufactured goods rose. That increase was better than September’s 53.7 and the median estimate of 53.1. In Germany, the manufacturing PMI rose to 58.0 from the previous 56.4. However, the services sector contracted in Europe, with the services PMI falling to 49.4. In Germany and France, the services PMIs dropped to 48.9 and 46.5, respectively. Still, the biggest concern is the rising number of Covid-19 cases in Europe. For example, earlier today, Germany recorded more than 11k new cases.
The British pound rose slightly as traders reflected on the mixed economic data from the UK. Earlier today, data from Gfk showed that consumer confidence declined to a low of -31 in October from the previous -25. And, according to the Office of National Statistics (ONS), UK’s retail sales bounced back in September. The headline sales rose by 1.5% and at an annualised rate of 4.7%. Also, the core CPI rose by an annualised rate of 6.4%. Further, data from Markit showed that the manufacturing PMI declined from 54.1 in September to 53.3 in October while the services PMI fell to 52.3.
European equities rose by more than 1% as the market reacted to the strong earnings by Barclays. In the UK, the FTSE 100 rose by 1.45% while in Germany, the DAX rose by 1.10%. The pan-European Stoxx 40 index rose by 1% also. In its earnings report today, Barclays said that its quarterly profit rose to £610 million, up from a loss of £292 million in the second quarter. The figure was almost twice what analysts were expecting. Most of these gains came from its trading division, where revenue rose by 29%. The bank also benefited from strong demand for mortgages in the country. Its stock rose by more than 4% as the MSCI Europe Bank index rose by 3%.
The 30-minute chart below shows that the EUR/USD price fell to the 50% Fibonacci retracement level at 1.1787 earlier today. Since then, the price has bounced back and is now trading at 1.1843, which is slightly above the 23.6% Fibonacci retracement level. The price is also above the 25-day and 15-day exponential moving averages while the RSI is slightly below the overbought level of 70. Therefore, the price will likely continue rising in the American session.
The EUR/GBP price rose to an intraday high of 0.9063, which is higher than this week’s low of 0.9000. On the four-hour chart, the price is at the intersection of the 14-day and 28-day exponential moving averages. It is also slightly below the descending pink trendline that connects the highest points in September and October. Similarly, the price is above the two lines of the envelopes indicator. Therefore, the pair is likely to continue rising as bulls aim for the next resistance level at 0.9100.
The FTSE 100 index rose to an intraday high of £5873, which is the highest level since October 21. On the four-hour chart, the price has managed to move above the 14-day and 28-day EMA. It has also risen from this week’s low of £5705 while oscillators like the Average True Range (ATR) and MACD have continued to rise. Therefore, the index will possibly continue rising, although a pullback is possible near the close.