Bank of France business sentiment falls in May, Italian IP growth declines in April

The Bank of France business sentiment survey for May came in line with other recent sentiment indices, such as those of INSEE and the PMIs in hinting at an ongoing moderation in economic growth momentum in the second-largest member state.

Within the detail, the business sentiment indicators for manufacturing and services dropped to the lowest levels since October 2016 and September 2017, respectively. Even if the indicator for construction picked up, the overall survey results saw that the Bank of France maintained its second quarter GDP growth forecast of 0.3 percent quarter-on-quarter, which is consistent with forecast, noted Daiwa Capital Market Research in a report.

In the meantime, Italian industrial production figures for April surprised on the downside. On a sequential basis, the industrial production dropped 1.2 percent, the most in three months, while it slowed to 1.9 percent on a year-on-year basis, the weakest in a year. Looking through the recent volatility, industrial production dropped 0.7 percent three-month-on-three month, the worst performance in six months, with manufacturing falling 0.9 percent, the biggest fall since July 2016.

“The Italian figures reinforce our expectation that the euro area numbers, due Wednesday, will show a drop in IP of 1.0 percentM/M or more, potentially the steepest in almost two years”, added Daiwa Capital Market Research.

At 19:00 GMT the FxWirePro's Hourly Strength Index of Euro was bullish at 98.8654, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 37.922. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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