EUR/JPY consolidates above 177.50 amid strong EMU data, Yen weakness

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The Euro rallied for the fourth consecutive day against a weaker Japanese Yen on Friday.

The Euro remains steady above 177.00 against a weaker Yen.
An unexpected improvement in the Eurozone's preliminary PMIs increased support for the Euro.
Market concerns about Japan´s public finances are undermining confidence in the Yen.

The Euro rallied for the fourth consecutive day against a weaker Japanese Yen on Friday. The pair has returned to the upper range of the 177.00s after a slight pullback to 177.30 and is on track for a 1.8% weekly gain, its best performance since late June.

The common currency has drawn some support from the upbeat Eurozone HCOB Purchasing Managers’ Index (PMI) figures released earlier on the day, which have improved confidence in the region’s economic outlook, strengthening the case for a steady European Central Bank (ECB) monetary policy in the coming months.

October’s preliminary PMI figures revealed that the services activity expanded at its fastest pace in the last 12 months, with a 52,6 reading against expectations of a mild slowdown to 51.1 from the previous month’s 51.3.

Furthermore, the contraction in the manufacturing sector halted in October, with the index improving to the 50.0 level, which marks a standstill, against expectations of a decline to 49.5 from the previous month’s 49.8.

The Yen, on the other hand, remains vulnerable amid market speculation that the new Prime Minister Takaichi’s cabinet is working on a USD 90 billion stimulus program that would add pressure to the already strained public finances.

Economic Indicator

HCOB Manufacturing PMI

The Manufacturing Purchasing Managers Index (PMI), released on a monthly basis by S&P Global and Hamburg Commercial Bank (HCOB), is a leading indicator gauging business activity in the Eurozone manufacturing sector. The data is derived from surveys of senior executives at private-sector companies from the manufacturing sector. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the manufacturing economy is generally expanding, a bullish sign for the Euro (EUR). Meanwhile, a reading below 50 signals that activity among goods producers is generally declining, which is seen as bearish for EUR.

Economic Indicator

HCOB Services PMI

The Services Purchasing Managers Index (PMI), released on a monthly basis by S&P Global and Hamburg Commercial Bank (HCOB), is a leading indicator gauging business activity in the Eurozone services sector. As the services sector dominates a large part of the economy, the Services PMI is an important indicator gauging the state of overall economic conditions. The data is derived from surveys of senior executives at private-sector companies from the services sector. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the services economy is generally expanding, a bullish sign for the Euro (EUR). Meanwhile, a reading below 50 signals that activity among services providers is generally declining, which is seen as bearish for EUR.