Broad-Based Eurozone Recovery Not Quite Enough
There’s too much uncertainty about the geopolitical situation right now, and that is weighing on riskier assets today. Indeed, the euro is struggling a bit, even though it appears as though there is a broad-based recovery happening in the eurozone.
The latest Eurozone Composite Purchasing Managers Index, compiled by Markit Economics, indicates that a broad-based recovery is underway. The PMI reading showed an improvement to 51.5 from the July number of 50.5.
Even with this good news, though, the euro is struggling. First of all, there are big differences between Germany and France. Even though the eurozone as a whole is improving, and Germany is gaining ground, France is slipping. French PMI is still below 50 — and slipping — which indicates contraction. As the second-largest economy (behind Germany) in the eurozone, France is a big deal.
Also not helping the situation right now is uncertainty over Syria. The markets have yet to price in action on Syria, and with Russia saying it might approve strikes against Syria, there’s a bit of uncertainty in the mix.
At 11:53 GMT Euro is a little higher against the dollar, but struggling to hold the lead. EUR/USD is up to 1.3172 from the open at 1.3171. EUR/GBP is down to 0.8439 from the open at 0.8466. EUR/JPY is down to 131.0245 from the open at 131.1450.
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