European session review: EUR little changed after European PMI data show that eurozone’s economic recovery stalled in September, impacted by rising infection rates and ongoing social distancing measures

EUR traded flat against most other major currencies in the European session on Wednesday after the European PMI data, released by IHS Markit, showed that business activity stalled across the Eurozone in September, as faster growth of manufacturing (led by Germany) was offset by a renewed downturn in the service sector, linked to resurgent COVID-19 infection rates. However, the single European currency strengthened against AUD and NZD, which were pressured by prospects of further monetary easing in Australia and New Zealand.

According to the report, the flash IHS Markit Eurozone Composite PMI dropped to 50.1 in September from 51.9 in the previous month. That was the lowest reading since June, indicating near stalling of the region’s economy at the end of the third quarter as rising infection rates and ongoing social distancing measures curbed demand, notably for consumer-facing services. Economists had forecast the indicator to decrease to 51.7 in September. The Flash Eurozone Manufacturing PMI climbed to 53.7 in September from 51.7 in August. That was the highest reading since August 2018. Economists had forecast the indicator to increase to 51.9 in September. Meanwhile, the Flash Eurozone Services PMI Activity Index fell to 47.6 from 50.5 in August. That marked the first decline in services activity since June. Economists had forecast the indicator to remain at 50.5 in September.