Is European Economy Healthy Enough?

Is European Economy Healthy Enough?

What is happening?

Germany will release the flash Purchasing Managers' Index (PMI) for manufacturing and services industries at 10:30 GMT+2 on January 24. It is an index based on surveyed purchasing managers in manufacturing and services industries. All numbers above 50.0 indicated industry expansion; below showed contraction. The market hasn't seen a manufacturing index below 50.0 for 17 months, but it is far from historical highs in March 2021.

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On the other hand, services PMI was below 50 in April and December 2021.

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Does it worth trading?

Is PMI a leading indicator?

The PMI is widely seen as an accurate and timely indicator of business conditions that helps analysts and economists correctly anticipate changing economic trends in official data series such as gross domestic products (GDP), industrial production, employment, and inflation. In addition, because PMI data are sometimes released months ahead of comparable official data, the PMI surveys are ranked among the world's most market-moving economic data releases.

How to trade on PMI readings?

Due to the importance of the PMI index, it may influence all EUR pairs greatly. Furthermore, you can watch after other events related to EUR and combine them to catch a significant price movement.

  • If actual numbers beat expectations – EUR will rise.
  • Otherwise, it might fall.

Check the economic calendar

Instruments to trade: EUR/CHF, EUR/USD, EUR/JPY, EUR/CAD.

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