BNY’s Head of Markets Macro Strategy Bob Savage highlights that Eurozone composite PMI has risen to a three‑month high, extending private sector expansion, with Germany leading and France still in mild contraction. In the report, the ECB’s outlook is described as having swung from a marginal chance of a cut to a 50% chance of a hike in just two sessions, reshaping rate expectations and supporting the Euro.

Stronger data and hawkish repricing

"The Eurozone’s February composite PMI rose to 51.9 from 51.3 in January, marking a three-month high and extending the private sector expansion to 14 months, as stronger domestic demand lifted both manufacturing and services output."

"The services PMI increased to 51.9 from 51.6, a two-month high, with sales growth driven by domestic orders while export business continued to contract marginally."

"Among major economies, Germany led growth, Italy expanded at a faster pace, Spain slowed and France remained in contraction."

"The ECB’s outlook has now shifted from a marginal chance of a cut this year to a 50% chance of a hike in the space of two trading sessions; all associated EMEA central banks will also need to look at transmission mechanisms as well and keep potential policy gaps to a minimum."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)