The Euro-zone manufacturing PMI rose to 56.5 from 55.6 while the services PMI edged higher to 56.0 from 55.5. The gains were led by a sharp rise in Germany’s economy. It’s manufacturing PMI rose to 61.2 from 58.4, while the services PMI rose to 57.3 from 54.8.
That is an encouraging sign for the largest economy within the Euro-zone as it shows economic activity is recovering from the depth of the sovereign debt crisis earlier this year that knocked output down in May and June.
US stocks moved to their highest this week as by noon NY time, the Dow Jones was up close to 200 points as a collection of companies topped earnings estimates, raised their forecasts or did both.
While traders are still digesting the comments from Bernanke in which he said the economic outlook remains “unusually uncertain” today’s US data did help increase risk appetite as existing home sales fell by less than expected and June’ index of leading economic indicators also produced a better than expected number.
Currencies most closely tied to risk sentiment and global growth, like the Canadian and Australian Dollars, fared very well in today’s trading. The AUD/USD pair for instance pushed above its resistance at 0.8850, a level it was unable to breach over the lats two weeks. The USD/CAD retested its lows from yesterday’s session, undoing the move in favor of the greenback we had seen in yesterday’s NY session which corresponded with Bernanke’s testimony.
With the Euro-zone stress tests ready to be unveiled and so far leaks have not set off a sell off in equities, we may be heading into this weekend focusing a bit more on the positive, following a few weeks where fears of a double-dip and fears of deflation were the dominant theme.