Euro has been edging higher against the dollar this morning, supported by improved PMI data that indicate business conditions in the euro zone has stabilized in the beginning of this year following declines seen in the final quarter of last year. This gives optimism that Europe may even avoid a sliding back into recession.
The Final Services PMI data rose for the first time since August indicating that the euro region has shown signs of growth.
The services PMI index rose to 50.4 in January from December’s 48.3, in December, confirming an earlier flash estimate. The data moved above the 50 level for the first time in five months. Separate PMI data for individual countries in the euro zone are diverse though. German PMI hit a seven-month high and French PMI reached a five-month high, while readings for Italy, Spain and Ireland remained in contraction phase, i.e. below the 50-level that demarcates growth from contraction. However, the rate of decline eased in Italy and Spain.
Meanwhile, data also showed that euro zone factory output strengthened in January, led by growth in Europe’s two largest economies, Germany and France.
The Markit euro-zone composite index based on a survey of purchasing managers in both industries rose to 50.4 from 48.3 in December. January’s reading is unchanged from an initial estimate on Jan. 24. A reading above 50 indicates expansion.
EURUSD has been holding steady after the data, trading as high as 1.3180 by 10:30 GMT from the European session open of 1.3142.