With mixed PMI data out of the Eurozone and anxiety surrounding the equities at the moment, John Hardy, Saxo Bank’s Head of FX Strategy, is seeing consolidation in the currency market.

Eurozone Manufacturing PMI fell to a 14 month low of 50.5, from 50.7 in August. New orders increased slightly, while employment levels remained unchanged. The Flash Eurozone PMI Composite Output Index also fell to a 9 month low of 52.3, down from 52.5 in August. The series of lows surrounding Eurozone manufacturing have suggested that this trend could continue in October.

The euro has been performing rather strongly recently and is up after the release of today’s PMI data. EURUSD has remained unchanged according to John as investors wait for US manufacturing PMI out Tuesday afternoon. The dollar has fallen slightly against the yen after Friday’s highs of 109.31. The euro is down against the yen, having fallen below its 200 day moving average.

The Australian dollar rallied overnight after HSBC Flash China Manufacturing showed slight growth for the Chinese economy. PMI data rose to 50.5 from 50.2 in August, which HSBC categorized as “modest growth.”  John sees this as a short-lived rally, highlighting the fundamental weakness in the economy. Given Australia’s relatively high level of dependence on the Chinese economy, John believes that there is “a large downside potential,” as demand in China decreases.