European Equity Benchmarks Close Mixed; Eurozone Business Activity Accelerates

EUR/USD Forecast: 1.20 Mark Seems Elusive, EZ PMIs And Draghi In focus

EUR/USD Forecast: 1.20 Mark Seems Elusive, EZ PMIs And Draghi In focus

Analysts said the reading points to a sustained recovery, with some saying they may now need to upgrade their forecasts for economic growth in the single currency area.

"Growth accelerated in both manufacturing and services, albeit with the former continuing to lead the expansion".

Eurozone's private sector expanded at the fastest pace in four months in September signaling that the economy ended the third quarter on a strong note. While service sector activity showed the largest rise since May, the increase in manufacturing output was the largest since April 2011.

The Flash U.S. Services Business Activity Index fell to 55.1 from 56 a month earlier.

At the same time, the factory PMI climbed to 58.2 from 57.4 a month ago, while it was forecast to fall to 57.2.

France, the eurozone's second-biggest economy, also had a strong reading, providing "more good news for Macron", Berenberg's Hense said, as French President Emmanuel Macron makes a push to implement controversial labour reforms.

While PMI data will embolden policymakers, as inflation is set to rise only gradually markets are overestimating how soon the European Central Bank will raise interest rates, Stephen Brown, an economist at Capital Economics, said. The survey showed that German manufacturing is also enjoying a boom, with activity accelerating to 60.6, a near six-and-a-half-year high.

September data revealed a strong increase in US private sector business activity, with the rate of growth close to August's seven-month peak.

"September's rise in the euro-zone Composite PMI suggests that the recovery has regained momentum after a brief summer lull", said Stephen Brown at Capital Economics.

Markit's flash reading is based on about 85% to 90% of total PMI survey responses that go into the final report each month. Average growth in the third quarter as a whole was robust but slightly below that seen in quarter two, reflecting the comparatively subdued rate of expansion seen in July.

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