The purchasing managers’ indices for the euro zone gave contradictory signals in the morning. The still gloomy mood in the industry improved somewhat more than expected in October. In the service sector, however, the indicator fell unexpectedly. The figures from Germany were a positive surprise, where the data for the industrial and services indicators increased. In France, however, it was the other way around.
However, the indices remain at a low level, especially in industry. “There can be no talk of a trend reversal,” commented Thomas Gitzel, chief economist at VP Bank. “There is a lack of orders and, given that interest rates are still comparatively high and the economic outlook is uncertain, companies are also holding back on investments.” The weak data from Germany and France did not bode well. “During the upcoming winter months, the Eurozone is at risk of slipping into recession,” writes Gitzel.
Expectations of more significant interest rate cuts in the Eurozone had recently weighed on the euro. Recent statements from the ECB also contributed to this. Investors are firmly assuming that the central bank will reduce the key interest rate again by at least 0.25 percentage points in December. Given the ongoing weak economic situation, there is increasing speculation that interest rates will be cut by 0.50 percentage points.
For other important currencies, the ECB set the reference rates for one euro at 0.83210 (0.83148) British pounds, 164.12 (164.66) Japanese yen and 0.9349 (0.9340) Swiss francs. A troy ounce of gold was trading at $2,725 in London in the afternoon. That’s about 10 dollars more than the day before./jsl/la/he
