It was a night of FX pop and drop in the currency market tonight as wildly divergent PMI data from France and Germany sent EURUSD on rollercoaster ride first dropping below the 1.3300 level on poor French data only to quickly recover on surprisingly strong German numbers. The French flash PMI readings badly missed their mark printing at 42.9 versus 44.9 eyed for the Manufacturing sector and 43.6 versus 45.6 for the services sector. The German data however saw a strong improvement as Manufacturing rose to 48.8 from 47.1 while services jumped to 55.2 well above the 50 boom/bust line.

The very weak reading out France suggests that President Hollande’s policies of social redistribution are wreaking havoc on the country’s business climate and may result in GDP contraction for Eurozone second largest economy. Still economic activity may recover as Hollande steps back from some of his more radical proposals and broader demand from Europe revives French industry.

The Germans on the other hand continue to fire on all engines with Manufacturing PMI now within a whisker of the 50 expansion line and Europe’s largest economy could act a locomotive for the rest of the region. The overall EZ data actually beat the estimates printing at 47.5 versus 46.6 on the manufacturing front while services rose to 48.3 versus 48.1 eyed.

The broader EZ PMI data shows that the recovery in periphery economies may offset the decline in French production and suggests that the region is starting to generate some positive momentum for growth. The EURUSD recovered after the early flutters and stabilized at 1.3325 in morning European trade. If ris flow remain constructive the pair could make another run the 1.3350 level and try to mount a recovery towards the key 1.3400 resistance level as the day proceeds.