The bulls are under the carpet

Of the euro area

The business activity index Markit in September has increased to 56.7 p, confirming for a stronger European economy in the 3rd quarter. The increase of production has increased to a four-month period, mainly due to the expansion of the new orders volume which reached 6.5 years maximum, and also the rate of creation of new jobs to the maximum for the whole period of research. Record employment growth, we strive for a resumption of consumer activity, which is supported by an increase of output prices for the third consecutive month, who has completed the period of a reduction of six months, apparently.

At the same time, one of the main indicators of the health of the economy, especially Retail, remains at a low level. In August, sales were down 0.5%, which is the second consecutive decline for the month, and the overall index of sales of the euro zone is worse than the other countries of the EU as a whole, and the gap between the two indices are growing.

The euro has significantly adjusted from the September highs, but as of this writing, the driver is in favour of the exhaustion of the dollar. Investors are worried about the weak data on employment in September, which will be published on Friday. If the released data came in significantly better than expectations, it will reduce the euro to 1.16 below, but the possibility of this thing is not high. The euro is expected to trade near current levels. The growth is limited to the level of 1.1820, which will not be easy without a new engine of growth.

United Kingdom

The macroeconomic data from the United Kingdom as a whole is quite negative for the pound. According to Markit, business activity in the services sector amounted to 53.6 p in September, which is near the bottom of the year. The growth of business activity in the manufacturing sector slowed to 55.9 p, compared to 56.9 p in August. The worst situation is in the construction sector due to the reduction of its activity after the period of stagnation.

The book is under pressure. It is possible that the support of 1.3220 fails, therefore, the pound will continue to decline. The nearest target is 1.2940 / 80.

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