EU PMI's an open window to sell the euro?
Eurozone PMI data is off to a bad start with weak French data, which could take a further toll on EUR sentiment. With the ECB meeting out of the way, the focus can go back to fundamentals, Italian elections in September, the energy crisis and recession risk.
Germany's PMIs are even worse than the French data. Both manufacturing and services printed at 49.2, well below expectations and both in contractionary territory. The composite flash is a dismal 48.0.
These gnarly PMI readouts could be an open window to sell the Euro on a policy mistake premise.
Though the knee-jerk spike has moderated somewhat, bunds had a more substantial initial reaction to the German PMI print than the French one. The futures gained roughly half a point on each bad print, with the German 10y yield down 12bp on the day.
USDCHF topped against the .9730/40 resistance level several times on Thursday; since then, the softer US data prints and, as a result, lower US yields have been weighing on the USD. The widening of peripheral spreads post ECB has been weighing on EURCHF, where the market has been taking back some shorts recently and now seems eager to re-instate
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