Overall, we expect to see a slight improvement in euro area PMIs for July. In ourview it will probably be a bit more pronounced in the service sector, where we expecta rise to 53.1 from 52.8 in June, while lagged effects of the slowdown in China andthe US earlier this year still weigh on activity in the manufacturing sector – weforecast a small rise to 51.9 from 51.8 in June. Regarding the US manufacturing PMI,we forecast a rise to 58.0 from 57.3 in June, thus indicating a further pickup inmanufacturing activity in the US.
The Ukraine-Russia conflict is still very much in focus although the market reactionhas been relatively muted following the announcement of new measures to sanctionRussia on Tuesday. Today the EU Commission will propose additional names to puton the list of individuals targeted by EU sanctions. We could also get further hintsabout potential ‘phase 3’-sanctions targeting specific Russian economic sectors,which could be put in place if Russia does not contribute to defuse the conflict.
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