The eurobulls were disappointed by the release of the PMI indexes. Business activity in the service sector dropped in Spain, Italy, the Eurozone, Germany and the UK. The level was unchanged in France. Due to a sharp drop in the euro/pound pair, the euro/dollar cross lost 50 points to 1.1115.
The February business activity in the service sector in Spain was 56.2 (forecasted 56.7, previous 56.7).
The February business activity in the service sector in Italy was 50.0 (forecasted 51.4, previous 51.2).
The February business activity in the service sector in France was 53.4 (forecasted 53.4, previous 53.4).
The February business activity in the service sector in Europe was 53.7 (forecasted 53.9, previous 52.7).
The February business activity in the service sector in Germany was 54.7 (forecasted 55.5, previous 55.5).
Strong data for retail sales could hold back sellers for a while, but, judging by recent quotes, they’re readying for a test of the 1.11 level. The 1.1150 limit has been broken, below which protective stops were triggered. 1.1097 has stepped in as an interim limit (the 26/01/2015 minimum). At 13:16 EET the pair was trading around 1.1120.
The January Eurozone retail sales index was 1.1% MOM and 3.7% YOY (forecasted 0.1% MOM, 1.9% YOY, previous 0.3% and 2.8% reassessed to 0.4% MOM and 3.1% YOY respectively).
Whilst the euro/pound cross was falling, the pound/dollar went up to 1.5364. As soon as it became clear that February growth in the UK service sector had slowed, the pound/dollar rate lost 32 points.
The PMI indicator surprised traders slightly. The February UK business index for the service sector was 56.7 (forecasted 57.1, previous 57.2).
ADP, ISM in the US service sector and the Bank of Canada’s decision may drive trades in New York. According to forecasts, it’s expected that 220,000 new jobs were created in the non-agricultural sector in February, as opposed to 213,000 in the previous month. According to the ISM index, a 0.2 reduction of the indicator is expected, leaving it at 56.5.
Don’t forget, on Thursday both the Bank of England and the ECB are due to convene. Now the euro and the pound have the ability to go down around another 30 points, following which they’ll rally for tomorrow’s events.