Euro Hovers at $1.16 as France Drags Eurozone PMI
The euro hovered around $1.16 as investors digested flash Eurozone purchasing manager index data and awaited delayed US inflation figures due later Friday.
Eurozone business activity accelerated in October, with the PMI Composite rising to a 17-month high of 52.2 from 51.2, signaling the strongest expansion since mid-2024.
The pickup was driven by services, where the PMI Services index jumped from 51.3 to 52.6, a 14-month high, while manufacturing finally edged up to the neutral 50.0 mark after months of contraction.
However, the upturn remains uneven across major economies. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, noted that France has increasingly become a drag, with its rate of contraction accelerating for two straight months amid political turmoil.
In contrast, Germany’s outlook “brightened significantly”, helping to lift the bloc’s overall figures. Still, manufacturing has been “stagnating for practically six months,” de la Rubia said, and weak new orders leave “little hope of a turnaround.”
Germany hit a 29-month growth high, the rest of the euro area expanded rapidly, while France posted its 14th consecutive monthly decline. The European Central Bank (ECB) is scheduled to meet next week, and market anticipate policy rate to remain unchanged.
In the US, inflation is expected to accelerate for a second month, ahead of the Federal Reserve’s meeting next week, where markets almost fully price in a 25bps rate cut.
Investors also welcomed news that US President Donald Trump will meet Chinese President Xi Jinping next week, amid trade tensions and a looming deadline for additional 100% US tariffs on Chinese goods. Since reversing lower last Friday from nearly $1.1730, the euro has been sold this week to almost $1.1575.
FX traders reported that options for 1.4 billion euro expire today. This month’s lows, around $1.1540-45 were the lowest the euro has been since August 5 when it approached $1.1525.
Another other set of options, for 1.1 billion euros at $1.1650, also expires. The euro is in a range of about $1.1590-$1.1615 through the European morning. #Euro Hovers at $1.16 as France Drags Eurozone PMI#
