Despite the good data received in the first half of the day on the economy of the euro area, the euro continued its decline against the US dollar and other currencies amid tensions related to the referendum in Spain.
According to the statistics agency, the index of supply managers for the manufacturing sector of Italy in September this year was at 56.3, while the growth was projected to 56.6 points.
In France, a similar index rose to 56.1 points in September, while in August the indicator was at 55.8 points.
As seen before, good growth was observed in Germany. So, according to the report, the index of supply managers for the German manufacturing sector in September this year reached 60.6 points, fully coinciding with the forecast of economists. In August, the indicator was at the level of 59.3 points.
If we take the eurozone as a whole, according to IHS Markit, the purchasing managers' index for the euro zone's manufacturing sector was at 58.1 points, below the preliminary value of 58.2 points. The index has grown in comparison with the August value of 57.4 points.
Data on the unemployment rate also against the euro. According to the report, unemployment in the euro area in August of this year remained at the level of 9.1%. This creates certain problems for the European Central Bank, since under current market conditions, it can hardly be expected to raise wages. This will limit the potential for growth in inflation in the euro area for the short term.
By the end of August this year, the number of unemployed fell by only 42,000.
As for the technical picture, it can be seen that as the euro approaches the lower support area of 1.1715-1.1720, the demand for a risk asset gradually increases. A break and a consolidation above 1.1750 could hit a number of stop orders of large sellers, leading to a larger upward correction for the euro in the afternoon. As long as the trade is below 1.1750, we can expect a bigger decline in the euro, with monthly lows around 1.1710 and a subsequent exit at 1.1660.
The British pound is experiencing difficulties with growth. Pressure on the pound had weak data on activity in the manufacturing sector of the UK.
According to the report of IHS Markit Ltd, the index of supply managers for the manufacturing sector in the UK in September 2017 decreased to the level of 55.9 points against the August value of 56.7 points. The data for September did not meet the expectations of economists who predicted that the index will be at 56.4 points.
