THE TAKEAWAY: Euro-zone composite output index revised higher to 48.6 -> Higher PMI's confirm ECB predictions for a recovery -> Euro rallies above 1.35

The Euro-zone composite PMI index reached the highest level in 10-months in January, further supporting the ECB's prediction that a recovery will take place in 2013. Markit's composite output index was revised higher to 48.6 from a previous 48.2 estimate. The Purchasing Managers' Index for services was revised higher to 48.6 from 48.3.

Both the PMI's for manufacturing and services in the Euro-zone saw the highest result in January since March 2012. Both sectors reported a record slowdown in declines in new orders, according to Markit. German composite output hit a 19-month high of 54.4, while French output hit a 46-month low of 42.7. Job cuts continued in January according to Markit, the rate of job losses was the fastest in over three years.

The Euro-zone entered a technical recession in the second and third quarter of 2012, but the PMI's support the ECB's prediction of a recovery later in 2013. Markit Chief Economist Chris Williamson said, "The Euro-zone is showing clear signs of healing, with the downturn easing sharply in January, and the region moving closer to stabilization in the first quarter."

The Euro rose over 70 points against the US Dollar in Forex markets as the countries' PMI's were being released. EUR/USD may now see resistance by the recent 14-month high set at 1.3710, and the pair may see support by a broken resistance line around 1.3500.

EURUSDDaily: February 5, 2013

Record_High_Output_Sends_Euro_Above_1.35_body_eurusd_daily_chart.png, Euro Probes Above 1.35 as Output Index Hits 10-Month High
Chart created by Benjamin Spier using Marketscope 2.0

-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to bbspier@fxcm.com .

Related Articles
  1. Forex Education

    Four Currencies Under the Spotlight in 2016

    With currencies having become the “tail that wags the dog,” in terms of their impact on the global economy, these four currencies will be under the spotlight in 2016.
  2. Forex Fundamentals

    These Currencies Are The Biggest Losers Of The Stock Downturn

    Here’s a list of the hardest-hit currencies amid the global stock market mayhem.
  3. Forex Strategies

    Will the Euro Continue to Rally? (EUO)

    The euro is rallying. Should investors chase this performance or is the real opportunity on the other side of the trade?
  4. Investing News

    China’s Forex Reserves Dropped Significantly

    China’s forex​ reserves dropped by a record $93.9 billion at the end of August to $3.56 trillion because the Central Bank has been selling dollars to provide a cushion to the falling yuan​
  5. Forex

    The Pros and Cons of a Fully Convertible Rupee

    Amid the rising economic power of India, the talks of making the Indian currency fully convertible are gaining momentum. We look at the pros and cons.
  6. Forex Fundamentals

    Chinese Yuan an Unlikely Reserve Currency

    As the world's second largest economy, China's challenge to America’s dominance includes a push to make the yuan (RMB), the world’s reserve currency. Whether it can do that now is unclear.
  7. Economics

    How Currency Enforcement Helped Sink The Trans-Pacific Partnership (TTP)

    One particular barrier to trade that has received much attention of late and caused delays in negotiations of the TPP is exchange-rate manipulation, by which a country artificially devalues its ...
  8. Forex

    Top U.S Forex News Sites

    Breaking news moves forex markets. Here are the top U.S. sites for tracking forex news.
  9. Investing

    Financial News Comparison: Bloomberg Vs. Reuters (BAC, GOOG)

    Access to financial information has grown with the expansion of digital news. Bloomberg and Thomson Reuters lead the pack, claiming a majority of the business information market.
  10. Economics

    Who Benefits From South Korea's Lowered Interest Rates?

    South Korea is the latest country to cut interest rates in an attempt to stimulate economic growth.
COMPANIES IN THIS ARTICLE
Trading Center