Members login
Fundamental Major Currencies
Written by article default Tuesday, 24 May 2011 09:28
PMI Services (Euro Zone)
| Previous | 56.7 |
|
|
|
| Forecast | 56.5 |
|
|
|
| Definition |
This indicator takes 50, as the middle range which separates between a contraction and an expansion in the sector, where the reading comes as a result of a Survey which gives businesses the chance to evaluate different situations. Since 1998 this indicator has cleared out its efficiency by getting a close reading to the real situation taking place. This indicator takes 50, as the middle range which separates between a contraction and an expansion in the sector, where the reading comes as a result of a Survey which gives businesses the chance to evaluate different situations. Since 1998 this indicator has cleared out its efficiency by getting a close reading to the real situation takin
|
|
|
|
| General Effect |
A rising PMI services reading above the 50 barrier levels means that the sector is expanding, where any reading coming below the above mentioned levels makes clear that the sector is contracting, signaling a weak performance in the sector which gives off expectations that this would have a direct effect on the growth reading because the services sector is a vital contributor to the growth of economies. This reading is considered to be one of the main indicators which would have a direct effect on the euro movement in addition the stock markets, markets tends to closely watch the advanced reading and then see if any changes occurred in the preliminary level and the services continued to be weak at the time the final revision was out. |
|
|
|
| Best Case Scenario | The reason for focusing on the Services PMI is that the sector's activity started to weaken before manufacturing on the back of dropping confidence and rising commodities prices and inflation and the best case is the reversal of the easing seen which will ease fears over the expected slowing recovery |
|
|
|
| Worst Case Scenario | Further slowdown in the sector's activity assures slowing spending and confidence and that will surely suppress growth and GDP expansion which will extend the downside pressure on the euro alongside slowing manufacturing activity as well |