Week Ahead: Economic Indicators (Europe)
Hey, Traders!
For the March 31st week, here is a list of all of the major economic indicators being released during the EU Session, with a brief synopsis of what they represent and what to possibly expect from the markets in reaction.
Monday
German CPI
The consumer price index (CPI) is a measure of the average price level of a fixed basket of goods and services purchased by consumers. Monthly and annual changes in the CPI represent the main rates of inflation. The national CPI is released alongside the HICP, Eurostat’s harmonized measure of consumer prices.
The consumer price index is the most widely followed indicator of inflation.
What to Expect
Higher-than-expected CPI could weigh on equities, especially interest rate-sensitive sectors like real estate and financials, as it may prompt tighter monetary policy.
Lower CPI might support stocks by increasing the chances of rate cuts.
A stronger CPI reading could boost the Euro, as it may lead to higher interest rates.
A weaker CPI could pressure the currency, signaling lower inflation and potential rate cuts.
Rising inflation may push bond yields higher as investors expect tighter monetary policy, while lower CPI could lead to declining yields due to easing inflation concerns.
Tuesday
French, German UK, Eurozone Manufacturing PMI’s
The Manufacturing Purchasing Managers’ Index (PMI) provides an estimate of manufacturing business activity for the preceding month by using information obtained from a representative sector survey incorporating around 500 companies. Results are compiled into a single index which can range between 0 and 100. A reading above 50 signals rising activity versus the previous month and below 50 the faster activity is contracting.
What to expect:
A higher than expected reading should be taken as positive/bullish for the EUR/ GBP, while a lower than expected reading should be taken as negative/bearish for the EUR/GBP.
Thursday
French, German UK, Eurozone Services/Composite PMI’s
Composite
The Composite Purchasing Managers’ Index (PMI) provides an estimate of private sector output for the preceding month by combining information obtained from surveys of around 1,000 manufacturing and service sector companies. Results are compiled into a single index which can range between zero and 100. A reading above 50 signals rising activity versus the previous month and below 50 the faster activity is contracting.
Services
The Services Purchasing Managers’ Index (PMI) measures the activity level of purchasing managers in the services sector.
The report is based on surveys of over 300 business executives in private sector services companies.
Data is usually released on the third working day of each month. Each response is weighted according to the size of the company and its contribution to total manufacturing or services output accounted for by the sub-sector to which that company belongs.
Replies from larger companies have a greater impact on the final index numbers than those from small companies. Results are presented by question asked, showing the percentage of respondents reporting an improvement, deterioration or no change since the previous month.From these percentages, an index is derived: a level of 50.0 signals no change since the previous month, above 50 signals an increase., below 50 a decrease.
What to expect:
A higher than expected reading should be taken as positive/bullish for the EUR/GBP, while a lower than expected reading should be taken as negative/bearish for the EUR/GBP.
Friday
German Industrial Orders
Manufacturers’ orders are a leading indicator for industrial production.
The figures are calculated every month by the Federal Statistical Office and represent the value of all orders for the delivery of self-made products confirmed by industrial enterprises with 50 or more employees in the respective reporting period.
The results are broken down by both sector and region of origin (domestic and foreign split into euro area and non-euro area). Monthly volatility can be very high, so moving averages give a much better guide to underlying trends.
What to expect:
A higher than expected reading should be taken as positive/bullish for the EUR, while a lower than expected reading should be taken as negative/bearish for the EUR.
