FxWirePro: Are Eurozone PMIs a threat for euro hedgers? Mounting EUR/USD FX OTC activities

European PMI data continues to indicate slowing growth momentum. 

The manufacturing PMI fell to 50.5 from 51.4 with services PMIs are flashing at 50.8 from 51.2. 

The PMIs are at their lowest since November 2014 with new orders falling to 47.9 (the lowest since April 2013).

All these leading fundamental indicators signal the region’s economic health and how businesses react quickly to market conditions, how their purchasing managers hold perhaps the most current & relevant insight into the company's view of the economy.

While the ECB held rates and stuck to the script: rates on hold until the second half of the year and repurchases will end well after the first rate hike. That said, Draghi delivered a dovish tone, saying that risks have moved to the downside with data consistently disappointing over the last couple of quarters and geopolitical risks brewing. He mentioned there were some discussions about increased TLTROS, but the case needs to build further.

OTC indications:EURUSD 3m positively skewed IVs have been signalling downside risks 

Skews stretched towards OTM put strikes signifies hedgers interest in the further bearish risks.

To substantiate these indications, we observe the fresh bids to mounting negative RRs in the 1m coupled, while bearish neutral RRs in the longer tenors remains intact which is in line with the above-stated bearish scenarios.

All these indications coupled with the fundamental news and the underlying scenarios are attractively appealing put holders for further downside risks of euro. Courtesy: Sentrix & Saxobank

Currency Strength Index: FxWirePro's hourly EUR spot index is inching towards -92 levels (which is bearish), while hourly USD spot index was at -6 (neutral) while articulating (at 08:44 GMT). 

For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex