THE TAKEAWAY: Euro-Zone PMI Services for June are better than expected at 46.4 -> German services output unexpectedly declines -> Euro traders look towards ECB meeting tomorrow
The Euro-Zone economic output declined for a fifth straight month according to the Markit Economics’ Composite Purchasing Managers’ Index. However, the June composite PMI was set at 46.4, which was higher than the previously estimated 46.0 and May’s 46.0 composite index.
The Euro-Zone PMI for services was also higher than initially estimated, surveyed at 47.1 instead of 46.8. Germany’s services output declined for the first time since September 2011, the June PMI was surveyed at 49.9 instead of the initial estimate of 50.3. Any PMI below 50.0 indicates decline in output.
Ireland was surveyed to have the strongest output growth in the Euro-Zone with a PMI of 51.4 for June, while Spain had the lowest composite PMI at 42.0. The low Euro-Zone output is due to continued detractions in new work orders, which led to a fall in employments.
The European Central Bank is set to meet tomorrow to decide monetary policy for the month of July. Most surveyed economists are expecting a 25 basis point interest cut to 0.75%, in an attempt to boost the contracting European economy.
Leading up to the composite PMI release, EUR/USD set new session lows above 1.2570. However, the
Euro still remains within a 2-day, 50 point trading range and today’s move lower was minor. Today’s session will remain influenced by speculation for tomorrow’s ECB and Bank of England monthly policy meetings.