Prior 47.8The final estimate is little changed from the preliminary reading as France’s manufacturing sector saw a modest jump in activity to round off the 2025 year. A strong rise in new export orders was the key reason in underpinning sentiment while employment conditions also returned to growth on the month. Meanwhile, output volumes also came close to stabilising after November’s sharp and accelerated contraction. HCOB notes that:”2025 closes on a surprisingly upbeat note. Business conditions in France’s manufacturing sector improved in December, with the PMI climbing back above the growth threshold to reach its highest level in three-and-a-half years. While this should not obscure the structural challenges of recent years, it is nonetheless a step in the right direction. Looking ahead, the sector could benefit from large-scale orders in defence and aerospace, particularly from abroad, as export demand has already shown greater resilience than domestic orders in recent months. Still, persistent political instability and the resulting uncertainty among businesses and households remain key headwinds for future prospects. “After several months of contraction, production at French manufacturing plants broadly stabilised in December. Robust export orders were a key support, even as pressure on supply chains and cautious customer behaviour continue to limit output. Companies have also been meeting orders by drawing down inventories. Purchasing activity, which has been declining since 2022, is now approaching stabilisation, potentially signalling that the sector may have reached its trough heading into next year. “The modest improvement in business conditions has prompted firms to raise prices again after three consecutive months of cuts, likely aimed at stimulating sales. Input cost inflation remains subdued, providing some relief, but margin pressures will persist if demand fails to strengthen further.” This article was written by Justin Low at investinglive.com. 🔗 Source 💡 DMK Insight France’s manufacturing sector just posted a modest uptick, and here’s why that matters: The final estimate of 47.8 indicates a slight improvement, primarily driven by a surge in new export orders. This could signal a rebound in demand, which is crucial for traders focused on European equities and the euro. A stronger manufacturing sector often leads to increased economic confidence, potentially influencing the ECB’s monetary policy decisions. If this trend continues, we might see upward pressure on the euro against the dollar, especially if the manufacturing PMI crosses the 50 mark, indicating expansion. However, it’s worth noting that while this is a positive sign, the overall PMI still indicates contraction. Traders should remain cautious and monitor related assets, like EUR/USD, for volatility. Key levels to watch are the 1.05 support and 1.07 resistance. If the euro breaks above 1.07, it could trigger more buying interest. Keep an eye on upcoming economic releases that could impact sentiment further. 📮 Takeaway Watch for EUR/USD around 1.05 support and 1.07 resistance; a break above 1.07 could signal stronger bullish momentum.

Prior 48.2The headline reading is a 10-month low as a drop in demand conditions sees German manufacturing activity slump in the final month of last year. Of note, manufacturing output slid into contraction territory for the first time in ten months amid falling export sales. And that led to deeper cuts to employment, purchasing and stocks of inputs.Meanwhile, price pressures remain sticky as goods producers reported a rise in average input prices for the first time in almost three years in December. And panel members also noted that metals were a key driver of cost inflation. So, that’s something to take note of at least. HCOB comments that:“Manufacturing had shown hints of recovery earlier in 2025, but the downturn has deepened again in December, driven by investment and consumer goods. The headline PMI index has slipped to its lowest point since last February. The sharp decline in export orders, which have now fallen for the fifth month in a row, points to a very weak start to 2026. “In December, industry was affected not only by weak demand and falling sales prices, but also by rising input prices, which came as a surprise. Over the past few months, these prices had shown signs of stabilising, but an increase is something that has not happened for almost three years. This increase could be due to the higher prices of industrial metals such as copper and tin, which were more expensive in euro terms both compared to the month before and a year ago. “Inventories of purchased goods have fallen at an accelerated pace over the past three months. With orders drying up, companies also want to save on inventories and are reducing them. Stocks of inputs have been falling since the beginning of 2023, which is unusually long, and developments over the past three months give no hope for a turnaround anytime soon. “Staff reductions continued almost unabated in December. Lower investment and cost-saving measures likely drove that trend. The accelerated depreciation option, which has been available since last July, has obviously not yet had any visible effect. With the start of government-backed infrastructure projects and the booming demand for defence equipment, things could look different in 2026. In fact, more companies now expect higher production a year from now.” This article was written by Justin Low at investinglive.com. 🔗 Source

Prior 49.6Euro area manufacturing activity slumped in December with the headline reading being a 9-month low amid a fresh decline in output. Demand conditions are showing renewed weakness with new orders falling at the quickest pace in almost a year. Overall business optimism is still being retained with the contraction here being a relatively mild one at least. We’ll have to see how things go at the start of 2026 to be sure of the trend for the economy next.On the inflation front, there is a bit of a hiccup with the rate of input cost inflation nudging up to a 16-month high. So, that will be something that ECB policymakers will have to be mindful of. HCOB notes that:“Demand for manufactured products from the eurozone is slowing down again. Significantly fewer orders, declining order backlogs, and continued inventory reduction are the most obvious indicators of this. It is not surprising that companies are continuing to cut staff in this environment. Companies seem neither able nor willing to build momentum for the coming year, but are instead exercising caution, which is poison for the economy. “The manufacturing sector has been in recession almost continuously since mid-2022. 2025 was shaping up to be the year when the economy in this sector could turn around. In fact, the downturn did ease considerably, but it did not manage to shift to a sustainable growth trajectory. For 2026, however, there is hope that Germany’s economic stimulus program and rising defence spending across Europe will breathe new life into the industry. Many companies obviously see it this way too, as confidence that production will be higher in a year’s time than it is today has risen again from an already high level. “Input prices have risen for the second month in a row. This cannot be due to energy prices, as oil and natural gas prices fell in December. However, industrial metals such as copper and tin saw a sharp rise after already increasing in price at doubledigit rates over the course of the year. Nevertheless, it is surprising that, despite the weak economic situation, companies are apparently unable to enforce lower prices for goods with prices that are less dependent on the global market. One explanation could be supply-chain problems, as indicated by longer delivery times. In short, things are not running smoothly. “There were some surprising regional developments in December. Spain’s manufacturing sector, which had been expanding almost continuously since 2024, has now slipped slightly into decline. France’s manufacturers, on the other hand, which have practically been in decline for three years, are showing signs of life again in December. The sharp slump in German and Italian industry is another disappointment. The relatively good performances in Greece and Ireland cannot compensate for this. Overall, it will not be easy for the manufacturing sector of the eurozone to gain a foothold in 2026. However, expansionary fiscal policy could help.” This article was written by Justin Low at investinglive.com. 🔗 Source 💡 DMK Insight Euro area manufacturing just hit a 9-month low, and here’s why that matters: Weak demand signals a potential slowdown, which could lead to more dovish monetary policy from the ECB. If new orders are falling at the fastest rate in nearly a year, traders should brace for potential volatility in the euro and related assets. This decline in manufacturing activity could ripple through to sectors like commodities and equities, particularly those tied to European exports. Watch for how this impacts the euro against the dollar; if the euro weakens further, it could test key support levels. The market’s reaction to upcoming ECB meetings will be crucial—if they hint at rate cuts, we might see a more pronounced sell-off in the euro. Keep an eye on the PMI data releases in the coming weeks as they could provide further insight into the trajectory of the eurozone economy. 📮 Takeaway Monitor the euro’s performance against the dollar closely; a break below key support levels could signal further declines if ECB policy shifts dovishly.

Prior 50.2There is a slight negative revision but it still marks an improvement to November, as the UK manufacturing recovery continues at end of 2025. Of note, both output and new orders nudged higher in helping to see the headline reading post a 15-month high. So, that’s a positive signal at least. However, there was a mild increase in price pressures as input cost inflation accelerated and output charges rose after declining in November. S&P Global notes that:“Further signs of growth emanated from the UK manufacturing sector before the turn of the year. Output rose for the third successive month and new order intakes improved, albeit slightly, for the first time since September 2024. The domestic market remained a positive spur to growth while new export business, despite having now fallen for almost four consecutive years, took a sizeable stride towards stabilising. “UK manufacturers benefited from several reduced headwinds towards the end of the year, as the negative impacts of the uncertainty surrounding the Autumn Budget, tariffs and the JLR cyber-attack all moderated. “The start of 2026 will show if growth can be sustained after these temporary boosts subside. The base of the expansion needs to shift more towards rising demand and away from inventory building and backlog clearance. December’s interest rate cut will hopefully play some part in assisting this transition, encouraging manufacturers and their customers to increase spending and investment. Manufacturers remain uncertain on this score, with business optimism falling for the first time in three months in December.” This article was written by Justin Low at investinglive.com. 🔗 Source 💡 DMK Insight UK manufacturing hitting a 15-month high is a big deal for traders right now. This uptick in output and new orders could signal a broader economic recovery, which might influence the GBP positively against other currencies. Traders should keep an eye on how this impacts forex pairs like GBP/USD, especially if it leads to speculation about interest rate hikes from the Bank of England. If the GBP strengthens, it could create ripple effects in related markets, such as commodities or equities tied to UK economic performance. But here’s the flip side: if this data is seen as a one-off improvement rather than a trend, we might see a quick reversal. Watch for key resistance levels in GBP/USD around recent highs, and consider how upcoming economic indicators might confirm or contradict this manufacturing data. The next few weeks could be crucial for positioning. 📮 Takeaway Monitor GBP/USD closely; a sustained break above recent highs could signal further strength in the pound as manufacturing data improves.

Australia S&P Global Manufacturing PMI dipped from previous 52.2 to 51.6 in December 🔗 Source 💡 DMK Insight The drop in Australia’s S&P Global Manufacturing PMI from 52.2 to 51.6 signals a slowdown, and here’s why that matters: A PMI below 50 indicates contraction, which could raise concerns about economic growth. For traders, this could mean a bearish outlook for the Australian dollar (AUD) as it reflects weakening manufacturing activity. With the PMI data coming in lower than expected, traders should keep an eye on how this impacts the Reserve Bank of Australia’s (RBA) monetary policy stance. If the trend continues, we might see the RBA reconsider its interest rate strategy, which could lead to further depreciation of the AUD. Look for key support levels around recent lows for the AUD/USD pair. If the PMI trend persists, it could trigger a sell-off, especially if the broader market sentiment shifts towards risk aversion. Additionally, monitor commodity prices, particularly iron ore, as they are closely tied to Australia’s economic health. The next few weeks will be crucial, so keep an eye on upcoming economic indicators and central bank commentary for potential volatility. 📮 Takeaway Watch for AUD/USD support levels; a sustained PMI decline could trigger further AUD weakness and impact commodity prices.

The USD/JPY pair gains ground to near 156.75 during the early Asian session on Monday. The Japanese Yen (JPY) softens against the US Dollar (USD) as traders have been disappointed with the slow and cautious pace of the Bank of Japan’s (BoJ) monetary tightening.  🔗 Source 💡 DMK Insight The USD/JPY’s rise to near 156.75 signals a critical shift in trader sentiment. The Japanese Yen’s weakness stems from ongoing disappointment with the Bank of Japan’s slow approach to monetary tightening. This has left the door open for the USD to strengthen, especially as the Federal Reserve continues to signal potential rate hikes. Traders should be aware that if the USD/JPY breaks above 157, it could trigger further buying pressure, potentially leading to a test of the 158 level. Conversely, if the pair retraces below 156, it may indicate a shift in momentum, suggesting a short-term pullback. Keep an eye on economic indicators from both the US and Japan, as any surprises could lead to volatility. The market’s focus on the BoJ’s next moves will be crucial; if they signal a more aggressive stance, the Yen could regain some strength, impacting this pair significantly. 📮 Takeaway Watch for a break above 157 in USD/JPY for potential bullish momentum, while a drop below 156 could signal a reversal.