On April 24, the Eurozone's business activity unexpectedly contracted for the first time since the end of 2024, driven by a sharp decline in the services sector, stemming from pressures on consumers due to the Iran conflict. According to the latest data released by S&P Global, the Eurozone Composite Purchasing Managers' Index (PMI) plummeted from 50.7 in March to 48.6, marking the first time the indicator has fallen below the 50-point threshold that separates expansion from contraction since late 2024. Analysts had previously forecast only a slight decline to 50.1. Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, stated on Thursday: "The Eurozone is facing a deepening economic downturn triggered by the Middle East conflict, presenting significant challenges for policymakers. Furthermore, increasingly widespread supply shortages could further restrain economic growth and exert greater upward pressure on prices in the coming weeks."
Separately, the US Services PMI for April, released by S&P Global on Thursday, rebounded to 51.3 from the previous month's three-year low of 49.8—this sector employs the majority of Americans. Any reading above 50 indicates economic expansion. Meanwhile, the preliminary US Manufacturing PMI for April came in at 54.0, up from the previous 52.3, reaching a 47-month high. However, this increase partly reflected efforts by companies to stockpile materials potentially facing shortages due to the conflict with Iran, driven more by precautionary hoarding than a substantial improvement in end-demand. The most concerning aspect of the day's data appeared in the price indices. Manufacturing respondents reported a significant rise in goods prices, with manufacturing input cost inflation hitting a 10-month high; the rate of increase in service sector selling prices also accelerated markedly, reaching a 45-month peak.
Key data to watch today includes the UK March Month-on-Month Seasonally Adjusted Retail Sales, Germany's April IFO Business Climate Index, Canada's February Month-on-Month Retail Sales, and the final US April University of Michigan Consumer Sentiment Index.
**USD Index** The US Dollar Index trended upwards yesterday, approaching the 99.00 mark and hitting an 8-day high. The index is currently trading around 98.80. The stalemate in US-Iran negotiations and lingering risk aversion in the market were significant factors supporting the safe-haven US dollar. However, renewed expectations for Federal Reserve interest rate cuts limited the currency's upside. Economic data released from the US during the session was mixed, impacting market sentiment. Today, focus is on resistance near 99.30, with support located around 98.30.
**EUR/USD** The Euro declined against the US Dollar yesterday, falling below the 1.1700 level and hitting an 8-day low. The pair is currently trading around 1.1690. The primary factor weighing on the Euro was the continued rebound of the US Dollar Index, which was supported by persistent risk aversion stemming from the deadlock in Middle East negotiations. Nonetheless, overall positive economic data from the Eurozone released during the session limited the pair's decline. Attention today is on resistance near 1.1800, with support around 1.1600.
**GBP/USD** The British Pound declined against the US Dollar yesterday, reaching an 8-day low. The pair is currently trading around 1.3470. The main pressure on the Pound came from the US Dollar Index's push towards the 99.00 level, fueled by renewed market risk aversion. However, generally positive economic data released from the UK during the session and ongoing expectations for Bank of England rate hikes contained the pair's losses. Today, resistance is seen near 1.3550, while support is found around 1.3400.
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