EUR/USD keeps firm as German, Eurozone manufacturing PMI cheers markets

The EUR/USD currency pair remained on the firmer side of trading during the mid-European session Tuesday, guided by an upbeat reading of German as well as Eurozone’s manufacturing PMIs for the month of December.

The headline Final IHS Markit/BME Germany manufacturing PMI climbed to an all-time high of 63.3 in December from 62.5 in November, surpassing the previous highest reading recorded in February 2011.

Expansion in the German manufacturing sector was also reflected in a further rise in the level of employment, as goods producers sought to improve capacity amid a near-record increase in backlogs of work. Although the pace of job creation eased slightly from November’s 80-month high, it still pointed to a marked overall rise in factory workforce numbers.

Further, strong rates of expansion in output, new orders and employment pushed the final IHS Markit Eurozone manufacturing PMI to 60.6 in December, its best level since the survey began in mid-1997. The PMI was up from 60.1 in November and identical to the earlier flash estimate.

The expansion was led by the investment goods sector, where the pace of growth signaled by the PMI was also a record high. The rate of improvement in the intermediate goods sector remained close to November’s survey-record. Growth was slower in the consumer goods sector by comparison but remained solid and well above its long-run trend.

Meanwhile, following the above-neutral PMI readings, the EUR/USD currency pair continued to hover at around 2-year high, rising 0.37 percent to 1.2050 by 09:15GMT.

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