EU Manufacturing Grows, But Pressure Remains
Today’s Spotlight Market
Despite the Eurozone showing slight signs of economic improvement, it looks as though Mario Draghi and the ECB are poised to increase stimulus later this month.? This is really not surprising to anyone, but it will be interesting to see how the currency markets will react to more liquidity in the EU.? Traders are pricing in an interest rate hike from the FOMC at this month?s meeting and the ECB is not even attempting to hide its hand, all but stating that further stimulus will be added.? In these situations, markets can oftentimes take the ?buy the rumor, sell the fact? approach, where we could actually see the markets react inversely to the news.? However, it has been over 20 years since US and European central banks had monetary policy that was opposite of one another. The last time this occurred the EU did not even exist, making the policy decisions somewhat of a wild card.
Fundamentals
The Markit Economics Purchasing Manager?s Index for the EU rose to 52.8 in November, up 0.5 from October.? The biggest manufacturing gains were in Germany, which saw an increase to 52.9 from 52.1.? The entire EU saw manufacturing growth, with the exception of Greece, which did see a modest improvement with contraction slowing.? The Greek PMI remained below 50, but did improve to 48.1 from 47.3 in October.? The jobless rate also unexpectedly fell to 10.7% in October, which is the lowest it has been in almost 4 years.? The ECB has all but confirmed that it will add stimulus this month, but the exact course of action the bank will take is unknown.? The ECB has a variety of tools at its disposal, including lowering interest rates, increasing asset purchases or a combination of the two.
?
————————————————————————————————
This article is provided for informational purposes only. No statement in this article should be construed as a recommendation to buy or sell a security or to provide investment advice. The content provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy and completeness. optionsXpress makes every effort to provide timely information to its recipients but cannot guarantee specific delivery times due to factors beyond our control. Derivatives involve substantial risk and are not appropriate for all investors. Please read the “Disclosure Statement for Futures and Options” prior to investing in futures or options. For investments using a straddle or strangle options strategy the potential loss is unlimited. Multi-leg option strategies are subject to multiple commissions. Profits may be eroded by the commission expended to open and close the positions and other risks apply.