By IFCMarkets

Better than forecast euro area data bullish for EU50

Euro area economic data in the last couple of weeks were not as bad as feared: contraction in private business sector activities slowed in May, investor morale improved further and consumer confidence improved more than expected. Markit’s Composite PMI for euro-zone went up to 30.5 in May 2020 from 13.6 in April when a reading of 25 was expected, according to preliminary estimate. Readings above 50 indicate activities expansion, below indicate contraction. The ZEW indicator of economic sentiment for the euro-zone rose from 25.2 in April to 46 in May, the highest reading since August 2015. And Eurostat survey results showed the consumer confidence index in euro-zone rose from the previous month’s 11-year low -22 to -18.8 in May, when a reading of -24.0 was forecast. Readings above 0 indicate optimism, below indicate pessimism. Better data are bullish for EU50. Nevertheless, further deterioration of euro-zone’s economic performance is a downside risk: Eurostat is due to report the change in business confidence for euro area on Thursday, and a steeper than forecast deterioration is a downside risk for EU50.

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