When are HCOB German/Eurozone flash PMIs and how could they affect EUR/USD?
HCOB German/ Eurozone flash PMIs Overview
Germany and the Eurozone have the preliminary Purchasing Managers’ Index (PMI) data for September to be released by S&P Global and Hamburg Commercial Bank (HCOB) on Friday, later this session at 08:30 and 09:00 GMT, respectively.
HCOB German Composite PMI is expected to inch lower to 53.7 in November, from 53.9 previously. Meanwhile, Manufacturing PMI may tick up to 49.8 from 49.6, while Services PMI is expected to ease to 53.9 from October’s 54.6.
HCOB Eurozone Composite PMI is expected to hold steady at 52.5 in November. Meanwhile, Manufacturing PMI is anticipated to climb to 50.2 from 50.0 previously, while the Services PMI is expected to remain consistent at 53.0 in November.
How could HCOB German/Eurozone flash PMIs affect EUR/USD?
The Euro (EUR) may maintain its position if HCOB Manufacturing PMIs come as expected. Any surge in data could strengthen the cautious sentiment surrounding the near-term European Central Bank’s (ECB) monetary policy outlook. The ECB is widely expected to keep rates unchanged through the end of 2026, with inflation hovering near its 2% target, stable economic growth, and unemployment at record lows. Traders will shift their focus toward the US S&P Global PMI data later in the North American session.
The EUR/USD pair holds gains as the US Dollar (USD) eases after September jobs data boosted expectations of a Fed rate cut in December. The CME FedWatch Tool suggests that financial markets are now pricing in a 36% chance that the Fed will cut its benchmark overnight borrowing rate by 25 basis points (bps) at its December meeting, up from 30% probability that markets priced a day ago.
Technically, the EUR/USD pair trades higher near 1.1540, targeting the immediate barrier at the crucial level of 1.1550, followed by the nine-day Exponential Moving Average (EMA) at 1.1560. Further upwards would support the pair to test the psychological level of 1.1600, followed by the 50-day EMA at 1.1609 and a monthly high of 1.1655. On the downside, the initial support lies at the psychological level of 1.1400, followed by the three-month low of 1.1468, followed by the five-month low of 1.1391.
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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