When are the HCOB German/ Eurozone flash PMIs and how could they affect EUR/USD?
HCOB German/ Eurozone flash PMIs Overview
The German and Eurozone have the preliminary Purchasing Managers’ Index (PMI) data for September to be released by S&P Global and Hamburg Commercial Bank (HCOB) on Tuesday, later this session at 07:30 and 08:00 GMT, respectively.
HCOB German Composite PMI is expected to hold steady at 50.5 in September, with market consensus of a rise in the Manufacturing PMI to 50.0 from 49.8 and the Services PMI to 49.5 from 49.3 in August.
HCOB Eurozone Composite PMI is forecasted to inch higher to 51.1 in September, from 51.0 in August. Meanwhile, Manufacturing PMI is anticipated to rise to 50.9 from 50.7 previously, while the Services PMI is expected to remain consistent at 50.5 in September.
How could HCOB German/ Eurozone flash PMIs affect EUR/USD?
Any upside in the HCOB Manufacturing PMIs may provide support for the EUR/USD pair as the Euro (EUR) remains stronger following the preliminary Eurozone Consumer Confidence Index for September, which improved slightly to -14.9 from -15.5 in August.
However, the upside of the EUR/USD pair could be limited as the US Dollar (USD) holds ground due to cautious Fedspeaks. Traders will likely observe the preliminary reading of the US S&P Global PMI reports for September later in the day. US Federal Reserve (Fed) Chair Jerome Powell will also be eyed.
Technically, the EUR/USD pair hovers around the psychological level of 1.1800 after registering 0.5% gains in the previous session. The bullish bias prevails as the 14-day Relative Strength Index (RSI) remains above the 50 level and supports the pair to explore the region around the 1.1918, the highest since June 2021, which was recorded on September 17.
On the downside, the initial support lies at the nine-day Exponential Moving Average (EMA) of 1.1776. A break below this level would weaken the short-term price momentum and prompt the EUR/USD pair to navigate the region around the 50-day EMA at 1.1677.
German economy FAQs
The German economy has a significant impact on the Euro due to its status as the largest economy within the Eurozone. Germany's economic performance, its GDP, employment, and inflation, can greatly influence the overall stability and confidence in the Euro. As Germany's economy strengthens, it can bolster the Euro's value, while the opposite is true if it weakens. Overall, the German economy plays a crucial role in shaping the Euro's strength and perception in global markets.
Germany is the largest economy in the Eurozone and therefore an influential actor in the region. During the Eurozone sovereign debt crisis in 2009-12, Germany was pivotal in setting up various stability funds to bail out debtor countries. It took a leadership role in the implementation of the 'Fiscal Compact' following the crisis – a set of more stringent rules to manage member states’ finances and punish ‘debt sinners’. Germany spearheaded a culture of ‘Financial Stability’ and the German economic model has been widely used as a blueprint for economic growth by fellow Eurozone members.
Bunds are bonds issued by the German government. Like all bonds they pay holders a regular interest payment, or coupon, followed by the full value of the loan, or principal, at maturity. Because Germany has the largest economy in the Eurozone, Bunds are used as a benchmark for other European government bonds. Long-term Bunds are viewed as a solid, risk-free investment as they are backed by the full faith and credit of the German nation. For this reason they are treated as a safe-haven by investors – gaining in value in times of crisis, whilst falling during periods of prosperity.
German Bund Yields measure the annual return an investor can expect from holding German government bonds, or Bunds. Like other bonds, Bunds pay holders interest at regular intervals, called the ‘coupon’, followed by the full value of the bond at maturity. Whilst the coupon is fixed, the Yield varies as it takes into account changes in the bond's price, and it is therefore considered a more accurate reflection of return. A decline in the bund's price raises the coupon as a percentage of the loan, resulting in a higher Yield and vice versa for a rise. This explains why Bund Yields move inversely to prices.
The Bundesbank is the central bank of Germany. It plays a key role in implementing monetary policy within Germany, and central banks in the region more broadly. Its goal is price stability, or keeping inflation low and predictable. It is responsible for ensuring the smooth operation of payment systems in Germany and participates in the oversight of financial institutions. The Bundesbank has a reputation for being conservative, prioritizing the fight against inflation over economic growth. It has been influential in the setup and policy of the European Central Bank (ECB).
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