Summary:

• Preliminary PMIs for November confirm a good shape of European economy which adds fuel to EUR rally
• The US dollar weakens across the board as the minutes from the latest Fed meeting were a bit more dovish somewhat
• Almost all of European indices have erased initial losses

 This morning investors focused on flash PMIs from the euro area which once again came in a good shape underscoring strong growth momentum in the European economy. Better than expected data has helped EUR strengthen against almost all of its peers, however, the scale of the moves hasn’t large as the US markets are closed today due to Thanksgiving. 

The European businesses are uninterruptedly booming according to the flash PMIs coming from France, Germany and the euro area. Momentum of an improvement increased across the board suggesting that managers are certain about the future which in turn could be reflected in sturdier economic growth in the upcoming quarters. However, despite a huge bump seen in PMIs the single currency has remained strengthened somewhat on the day and it’s still holding well above 1.18 against the greenback.

In terms of the FX market, one could notice that the US dollar was trading lower in the aftermath of the minutes. Even as the Federal Reserve seemed to certain with regard to a rate hike in the following month, many of participants cast a shadow on the inflation outlook stressing that the latest weakness could be something more than just transitory effects. The minutes also underlined that persistently below the target inflation may reflect a drop in inflation expectations.

European indices started the session in mixed moods. Sharp declines in China could spur higher risk aversion but on the other hand, preliminary PMIs from euro area were stellar underscoring strong economic conditions on the old continent which should bode well for companies’ profits. As of the time of writing DAX (DE30) is 0.17% down as well as the UK FTSE100 (UK100). At the same time, French CAC40 (FRA40) and Spanish IbEX (SPA35) are adding about 0.60%.

Thanksgiving day is important to the Americans and Black Friday is important to the markets. It begins a Christmas sales season which is crucial for the retailers and shows economic strength. Given that US indices are at all-time highs we inspect previous years to see if Black Friday has any meaningful impact.

There is no trading session in the US today due to Thanksgiving (contracts on US indices and other instruments are traded in limited time-frame, more details can be found HERE). Flash PMI readings from the Euro Zone are behind us, thus investors should await important prints from Canadian and the NZ economies as well.