ECB: ECB leaves rates unchanged and is ready to reinvest profits from QE

Weak data, released in the eurozone in the first half of the day, pushed the European currency together with the US dollar. Particularly alarming for the manufacturing sector in Germany, whose index pointed to a slowdown in growth rates of activity.

According to the data, the PMI Purchasing Managers Index for the manufacturing sector in Germany in January 2019 fell below the key level of 50 points. Although the data are preliminary, this state of affairs indicates a decrease in activity in the sector.

As stated in the IHS Markit report, in January this year, the German manufacturing PMI was 49.9 points. The main pressure on the index came from the situation with new orders, as well as the weakness of the automotive industry.

The preliminary PMI Purchasing Managers Index for the manufacturing sector in France in January of this year, on the contrary, increased and managed to pass over the mark of 50 points, reaching 51.2 points. Back in December 2018, the index was at the level of 49.7. Economists had expected the index to not exceed the level of growth and will be at around 49.9 points.

As for the same indicator for the euro area as a whole, the report shows that the economy continues to slow down at the beginning of this year, which will certainly be noted at the press conference of the President of the European Central Bank, which will be held this afternoon.

According to the submitted IHS Markit data, the composite index of PMI supply managers in the eurozone, which includes an indicator of activity in the manufacturing sector and the service sector, in January 2019 fell to 50.7 points from 51.1 points in December. Let me remind you that the index value below 50 indicates a decrease in activity.

The preliminary PMI Purchasing Managers Index for the Eurozone manufacturing sector in January fell to 50.5 points from 51.4 points in December.

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Today, it also became known that the European Central Bank left the refinancing rate unchanged, at the level of 0.0%. The deposit rate also remained at the same negative level of -0.40%. The ECB expects rates to remain at current levels for at least this summer inclusive. The European regulator also assured that it would completely reinvest the profits from QE over a long period after the first rate increase, which again upset traders who are putting more of a more aggressive monetary policy tightening.

The material has been provided by InstaForex Company - www.instaforex.com