The HCOB Eurozone Manufacturing PMI recorded 52.2 in April. This matched the forecast of 52.2.
The April manufacturing PMI of 52.2 confirms the steady economic expansion we have been tracking, but as it was in line with forecasts, it is unlikely to cause a major shock. The EURO STOXX 50 index is already up 7% since the start of 2026, indicating much of this stability was already priced in by the market. This suggests that selling volatility on major European indices could be a viable strategy, as the lack of a surprise should keep markets range-bound.
Implications For European Equity Volatility
This solid economic data gives the European Central Bank very little reason to consider cutting interest rates, especially with the latest core inflation figure for the Eurozone holding at 2.9%. We believe the ECB will remain on hold through the summer, a view supported by their recent neutral commentary. Therefore, derivative positions that profit from stable-to-higher short-term interest rates, such as options on EURIBOR futures, look attractive.
We see this manufacturing strength as fundamentally supportive for the euro, marking a significant recovery from the industrial slowdown we experienced through much of 2025. The data reinforces a bullish case for the currency, making long positions in EUR/USD call options a logical move for the coming weeks. However, the expected nature of the PMI report suggests a gradual appreciation rather than a sudden rally.
