Confidence in Germany’s manufacturing sector fell to its lowest level since October 2012 in September. Purchasing Manager’s Index (PMI) data for the sector showed that sentiment dropped from 43.5 in August to 41.1 in September and that the economy in Europe’s powerhouse is contracting dramatically. A reading above 50 shows expansion.
The sector has been hit by US President Donald Trump’s ongoing trade war with China, the diesel emission scandal and somewhat by Brexit. And Germany is now at risk of plunging into recession, having only just avoided in at the end of 2018.
The news dragged the EUR/USD pair firmly back below $1.10, with little support in sight. The Ifo Business Climate Index, a leading indicator of German economic activity, is expected to paint a similar picture this morning.
Meanwhile, the UK Supreme Court will decide this morning if Boris Johnson acted unlawfully by proroguing Parliament.
The British prime minister took a bullish stance yesterday. When asked by a journalist whether he would resign if the Supreme Court ruled against him, he responded, “Donnez-moi un break” (“Give me a break”). He also said that “Parliament will have bags of time to scrutinise the deal I hope we will be able to do”.
“It’s not too late for Brexit deal,” says Juncker