EUROPEAN session review: Euro remains strong

Data released: 

07:30 GMT Switzerland SVME - Purchasing Managers' Index (Mar) 54.4 56.7 57.6 

07:55 GMT Germany Markit Manufacturing PMI (Mar) 53.7 53.8 54.8 

07:55 GMT Germany Unemployment Change (Mar) -12K -10K -15K 

07:55 GMT Germany Unemployment Rate s.a. (Mar) 6.7% 6.8% 6.7% 

08:00 GMT EMU Markit Manufacturing PMI (Mar) 53 53.0 53.2 

08:30 GMT UK Markit Manufacturing PMI (Mar) 55.3 56.7 56.2 

09:00 GMT EMU Unemployment Rate (Feb) 11.9% 12% 11.9% 

Weaker than expected euro-zone CPI report for March has had very little impact upon the euro with EUR/USD continuing to trade just below the 1.3800-level. It is now an even closer call as to whether the ECB will ease monetary policy further at this week’s meeting. The lack of euro negative reaction highlights that the market remains sceptical over the ECB’s desire to effectively ease policy to combat low inflation. Without implementing a negative deposit rate or QE, it is likely that the euro will remain strong for now. 

EURO 

Data showed the unemployment in Germany fell by 12.000 during March, following a 15.000 decrease the previous month, while economists had forecast a 10.000 drop. The unemployment rate remained at 6.7%, against expectations of 6.8%. 

German PMI Manufacturing decreased to 53.7 points in March, from 54.8 points in February, that was almost in line with market consensus of 53.8 points. 

Eurozone PMI Manufacturing expansion slowed down to 53.0 points in March, from 53.2 points in February. 

EUR/USD fell under $1.3800. Initial resiastance is at $1.3840, then - at $1.3875 (Mar 24 highs). Break under $1.3700 (Friday’s lows) may widen losses to $1.3640 (Feb 27 lows). 

POUND 

The pound is under pressure after the data showed the UK PMI Manufacturing fell to 55.3 points in March, from 56.2 points in February, while analysts expected a rise to 56.7. 

GBP/USD stays on $1.6640. Resistance comes at $1.6700, then - near $1.6785 (Mar 7 highs). Minor support comes at Friday’s lows on $1.6600, then - at $1.6550 (Mar 27 lows). 

YEN 

The yen continues to weaken versus th dollar. 

USD/JPY holds at Y103.30, ahead of Y103/75 (Mar 7 highs). Minor support comes at Y102.20. Below Y101.70 support comes at Y101.20 (Mar 14 lows). 

DATA AHEAD 

At 14:00 GMT US report Feb Construction Spending with 0.2% expected after 0.1% earlier.
The same time Mar ISM Manufacturing PMI will be released.

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