Eurozone services PMI revised up to 55.8 from 55.6, which left the composite unchanged from the preliminary number at 56.7. Markit said the economy ended the third quarter “with a flourish as output growth accelerated to a fourth month high“. And while the average in the third quarter was slightly weaker than in the second quarter, the improvement in September was underpinned by “the steepest gain in new work received for almost six-and-a-half years“, which is good news for growth in the last quarter. France and Germany in particular are showing growth rates at 77-months and 76-months highs respectively.
UK presents growth as well , with UK’s September services PMI beating forecasts, and rising to a headline of 53.6 after August’s 11-month low of 53.2. This is a relief for sterling markets following the disappointing outcomes of the construction and manufacturing surveys. . The report is now all rosy reading, however. The headline reading remains below the average seen during the first half of the year, new business growth eased to a 13-month low, and input cost inflation intensified. There were concerns about the business outlook, since there were delays in decision making on large projects, said to be related to Brexit uncertainties. Confidence for the year ahead was the lowest since June, which in turn was the lowest since 2011. On a more positive note, job creation in the sector remained strong.
Sterling, having been pressured over the last week, rallied about 30 pips on the above-forecast headline, though follow-through has been limited so far with the PMI surveys collectively painting a picture of stagnation. Hence on Pounds pressure, UK100 is seen hitting 7476.7, which consider be 2-months high. After reaching month’s highs today, it fell slightly back at 7460.00 area. However UK100 is still up 0.09% for today. However since the index as seen in the hourly chart , is being overbought, we might see a correction down to 20-period MA, at 7450.00 which is also a confluence of the last down fractal. If this support level breaks then the next support is at 23.6 Fibonacci, at 7430.00. Hence intraday trading can be done in this instrument on the down retracement, with targets back at recent high are at 7470.00
As UK100 and GER30 are positively corrrelated, hence the same performance has been seen in GER30 as well, once PMIs indicated today growth in Eurozone area. The GER30 reached All-Times record highs, before falling back slightly as the index looks increasingly overbought and other Eurozone stock markets are heading south led by a 1.5% drop in the Spanish IBEX as Spain’s constitutional crisis deepens. The GER30 is still up 0.23% on the day at 12924.00, after closing morning’s gap and looking to reverse back higher. A consolidation might seen at 12900.00 which is close to the confluence of 20-period MA and 23.6 Fibonacci level. However a downtrend scenario can only be possible, if we see a break of the 2-day’s support level at 12860.00.
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