The preliminary assessment of Europe's business activity indices turned out to be worse than forecasts. The manufacturing index is the only one that came out slightly better than expected, which declined from 59.8 points to 59.7 points with a forecast of 59.4 points. Meanwhile, the index of business activity in the service sector fell from 62.8 points to 61.5 points, although it is expected to fall to 62.2 points. However, the composite index of business activity was very surprising, which fell from 60.2 points to 59.5 points. And it's not that they were waiting for a decline to only 59.8 points, but that its value is lower than its two components.
It is mathematically impossible for a composite index to be lower than both the production and the index in the service sector. It is obvious that we are talking about an error and a gross one, so that there will be a noticeable correction of either of the composite indexes in a larger direction, or both of its components in a smaller one during the publication of the final data. This will lead to a sharp increase in volatility. Perhaps, it was this discrepancy that led to the fact that the market mostly ignored these data and the Euro currency continued its sluggish growth.
Composite PMI (Europe):
The exact situation has developed in the UK, where the composite index of business activity literally collapsed from 59.2 points to 55.3 points against the forecast of 58.9 points. At the same time, the index of business activity in the service sector fell from 59.6 points to 55.5 points against the expected decline to 58.8 points. It should be noted that the composite index can be lower than the index of business activity in the service sector only if the production index is even lower. However, it fell from 60.4 points to 60.1 points against the expected decline of 59.1 points.
As we can see, there are the same inconsistencies with the UK indices as in the EU. But just like the euro, this did not lead to a stop of the corrective movement. Although in the case of the pound, it is not only a matter of waiting for similar data for the United States but also in its much greater oversold.
Composite PMI (UK):
This process continued after the publication of similar data in the United States. However, there were no oddities although the data also turned out to be noticeably worse than forecasts. Here, the index of business activity in the service sector literally collapsed from 59.9 points to 55.2 points with a forecast of 59.0 points. The manufacturing index fell from 63.4 points to 61.2 points, while they expected a decline to 63.0 points. As a result, the composite index of business activity declined from 59.9 points to 55.4 points, while we were waiting for a decline to 59.0 points. Therefore, it is not surprising that the US dollar continued to lose its position, as a result of which it was possible to complete a long-overdue correction. Now, the market is stagnant in anticipation of new trading ideas. But everything is bad today. Unlike yesterday, the macroeconomic calendar is absolutely empty, and it seems that the market will be marking time.
Composite PMI (United States):
The correction from this year's base returned the quote of the EUR/USD pair to the 1.1750 area, where there was a slight stagnation. It can be assumed that the downward trend cycle is still relevant in the market, and the correction is almost done.
The correction of the GBP/USD pair follows from the support area of 1.3570/1.3600, where the quote has already managed to return to the level of 1.3750. At the moment, the maximum correction value is possible up to the level of 1.3785, where a reduction in the volume of long positions is not excluded.