While the number of detected cases of coronavirus infection in the world has exceeded 5 million, many states are beginning to remove restrictive and quarantine measures, which is gradually reviving the economy, as evidenced by preliminary indices of activity in the service and manufacturing sectors. In some regions, there are also signs of normalization of the situation with coronavirus.
No one will be surprised that the 2nd quarter of the world GDP will show an unprecedented drop, but the growth of PMI indices also suggests that the decline is beginning to slow down, and the easing of quarantine measures will lead to an even greater recovery of the economy this summer, the prospects for which remain quite gloomy. Yes, we can safely say that the lows have passed, but we still see only a slowdown in the reduction of activity, while its recovery is still very far away, not to mention a return to pre-crisis levels. Let me remind you that the index level below 50 indicates a decrease in activity compared to the previous month.
Now let's run through the leading countries of the Eurozone and see what indicators were released today by the statistics agency Markit. The report on France said that the preliminary purchasing managers' index (PMI) for the manufacturing sector in May this year was at the level of 40.3 points, while in April it was 31.5 points, and economists predicted at the level of 36 points. The service sector also managed to slow its decline slightly. The preliminary index in May was 29.4 points against 10.2 points in April, which is higher than the forecast of economists, who expected a value of 27.5 points.
The German data also appealed to traders. The preliminary purchasing managers' index (PMI) for the manufacturing sector rose to 36.8 points in May this year from 34.5 points in April, while it was forecast at 28.5 points. But the index of the service sector showed almost double growth to 31.4 points in May against 16.2 points in April, with a forecast of 26 points.
In any case, the overall recovery in the activity also affected the indicator for the entire Eurozone, where the preliminary purchasing managers' index (PMI) for the manufacturing sector of the Eurozone in May jumped to 39.5 points against 33.4 points in April. The purchasing managers' index for the Eurozone services sector also rose to 28.7 points in May, up from 12 points.
However, there are also those who believe that the observed slight slowdown in the decline in activity compared to the previous month only demonstrates the depth of the fall in April, and does not mean that the situation will also improve in the future, let alone the return of the indices to a value above 50 points.
The overall composite purchasing managers' index (PMI) for the Eurozone in May was at 30.5 points, compared with 13.6 points in April, when it reached a historical low.
As for the technical picture of the EURUSD pair, more than pleasant data on activity led to a new wave of growth in risky assets, and a break in the resistance of 1.0980 in the first half of the day pushed buyers of risky assets towards the maximum of 1.1020, the breakdown of which will easily throw the euro to the 11th figure.
Today, a similar report was also released for the UK, where the preliminary composite index of supply managers in May rose to 28.9 points from 13.8 points in April. The manufacturing index jumped to 40.6 points, while the services sector recovered from its historic lows of 13.4 points to 27.8 points in May this year.
Returning to the topic of coronavirus, at the beginning of the week, there was news that one of the US biotech companies conducted the first successful phase of trials of a coronavirus vaccine. According to Moderna, clinical trials of the vaccine will end with positive results. The test, which began at the end of April this year on volunteers, shows good results, and after taking the mRNA-1273 vaccine, the number of antibodies of test participants exceeded the corresponding indicator in the blood of people who had COVID-19. But it is more important that the vaccine is safe and tolerated without complications. It is expected that the final stage of testing will be held in July this year.
Today, the British pharmaceutical company AstraZeneca announced that it expects to start its mass production of the COVID-19 vaccine, which is currently being developed jointly with the University of Oxford. It is expected that the final September tests will be successful, so the company has already signed the first contracts for the supply of at least 400 million doses. Such news is another blow to the coronavirus pandemic, which many expect will soon be defeated.
