Forex Trading: London Market Wrap
The euro fell sharply against the dollar by 112 points to the two-week low of 1.2972 from 1.3084 following the weaker than expected PMI data from Germany and China.
The initial gain the euro made to 1.3084 after the slightly better than expected French PMI data was quickly erased.
Germany’s composite Purchasing Managers’ Index which measures both manufacturing and service sectors, shrank for the first time in five months in April.
Germany’s Flash Manufacturing PMI for April came out lower-than-expected at 47.9 versus the median forecast of 49.2.
The April Flash Services PMI came out as 49.2 versus the median estimate of 51.0. Euro fell from 1.3084 to 1.2980.
The euro had made a temporary gain to the high of 1.3084 from1.3040 after the better than expected French April Flash Manufacturing PMI data of 44.3 versus the median estimate of 44.1. The April Flash Services PMI came out as 44.1 versus the median estimate of 42.3.
German government bond futures, which are traditionally bought on risk aversion, rose to a peak of 146.69, up 34 ticks. The 10-year cash Bunds yield dropped two basis points to 1.2 percent.
The data has once again raised speculation that the European Central Bank will cut its key interest rate at the upcoming ECB policy meeting on May 2.
The HSBC preliminary estimate of China’s Manufacturing Purchasing Managers’ Index fell to 50.5 in April from 51.6 in March which suggested a weaker global demand for China’s vast factory sector as new export orders shrank.
The 21-day moving average fell from 1.3050 to 1.2980. The 90-day moving average fell from 1.3045 to the 1.2980 support line.