(MENAFN– ecpulse) Investors are eagerly anticipating July German IFO sentiment data on Thursday, after yesterday’s better-than-expected PMI data signaled a rebound in euro area’s manufacturing and services sectors in July. More upbeat data today would definitely stimulate euro gains!
- IFO Business Climate Index (July) probably rose to 106.1 vs. 105.9
- IFO Current Assessment Index (July) likely rose to 109.7 vs. 109.4
- IFO Expectations Index (July) probably stood at 102.5
Recent data from German has signaled a strongly-awaited rebound in economic activity. The first sign was Wednesday`s surprising numbers of the Purchasing Managers` Index (PMI) for July, which gave some hopes the euro-area economy is heading to a gradual recovery as mentioned previously by European Central Bank (ECB) President Mario Draghi.
The headline manufacturing and services composite rose to 50.4 from a contraction of 48.7. The manufacturing jumped to 50.1 from 48.8 in June, recovering an expansion for the first time in two years. Services PMI narrowed contraction to 49.6 from a prior of 48.3.
In Germany, data pointed to expansion in start of the third quarter, with both manufacturing and services showing above-50 PMI numbers. The preliminary composite index rose to 52.8 in July – highest in five months, from 50.4 in June.
The stream of positive economic data out of Germany, Europe largest economy, is basically a reflection of the ECB`s ultra-loose monetary policy and recent crisis-fighting strategy introduced to tackle a three-year old financial trauma that dragged the bloc into its worst recession on record.
The euro would definitely pick up further against major currencies if Thursday`s data beat analysts` median estimates.
EUR/USD is trading up around 1.3215 and likely to extend the correction of the past three weeks, and breaching 1.3275 will confirm the upside trend, however, failure of breaching that level might trigger a bearish correction.
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