The dollar-bloc currencies and the Norwegian krone were the strongest major currencies last week but are leading the downside today. The slump in commodity prices is taking a toll. WTI is off by nearly 3%. Copper is off about half as much and gold is off about half as much as copper. More broadly, the US dollar is firm across the board.  

Large euro bids had been rumored to have been stacked near $1.06. The euro got as near it as possible without going through (according to Bloomberg the low was $1.0601 in a Tokyo-less Asian session) to a new seven-month low. A somewhat better than expected flash eurozone PMI may have helped the euro recover but it ran out of steam near $1.0650.   

German industrial order and output data, amid slowdown in China (and Russian sanctions) gave rise to some concern about the strength of the European locomotive. However, today’s flash PMI reading is considerably more upbeat. The manufacturing PMI rose to 52.6 from 52.1. The Bloomberg consensus had expected a small decline. This is the best reading since August. The service PMI rose to 55.6 from 54.5.Here too the market expected a small decline.It is the highest since September 2014. The composite reading rose to 54.9 from 54.2. 

France was not nearly as robust. The manufacturing PMI did tick up (50.8 from 50.6, matching expectations), but the service PMI slipped to 51.3 from 52.7. The market had not expected such a deep pullback.This forced the composite reading down to 51.3 from 52.6.

The strength of the German reading, however, lifted the eurozone readings. The eurozone composite of 54.4 (up from 53.9) represents a new cyclical high. This drives home a point we have made before.The economic data does not appear to justify the sense of urgency that Draghi and many others at the ECB have expressed. The case for more action is predicated on the ECB staff revising down its forecasts for growth and inflation.