Folrex Afternoon summary – Key Notes
- China manufacturing PMI 50.3 vs. 50.5 survey
- China, HSBC Manufacturing PMI, 50 vs. 50 survey
- Spain PMI manufacturing 54.7 vs. 52.1
- Switzerland PMI manufacturing 52.1 vs. 53.1
- Italy PMI manufacturing 49 vs. 49.4
- France PMI manufacturing 48.4 vs. 47.6
- German PMI manufacturing 49.5 vs. 50
- Eurozone PMI manufacturing 50.1 vs. 50.4
- Italy QDP q/q -0.1%, GDP y/y -0.5% vs. -0.4%
- UK manufacturing PMI 53.5 vs. 53, previous month revised up to 53.3
- BBA mortgage approvals 59.4k vs. 59k
- US manufacturing PMI 54.8 vs. 55
- ISM Manufacturing 58.7 vs. 58
The markets opened Monday hot off the news of the Swiss voters rejecting the Gold referendum. While Gold futures initially declined during early Asian session, losing as much as 0.85%, the precious metal soon reversed to rally back up, trading near 1183 levels or about 1% up for the day. The Swiss franc was weak and mostly muted.
Credit ratings agency, Moodys downgraded Japan’s ratings from A1 to AA3. The Yen was however muted to the news but was seen stronger against the US Dollar as price broke down to the daily pivot level, noted in our daily analysis.
Manufacturing PMI’s from Eurozone, Asia and the UK were on the tap. While China’s manufacturing managed to remain above the 50 level, the signs are starting to get clearer of a slowdown in the world’s second largest economy. PMI’s from Eurozone was mostly mixed but German manufacturing dropped 49.5, the second time this year, sparking concerns of a possible rub off onto the GDP numbers. The Euro remained muted to most of the fundamentals from Europe but was well positioned for its bullish rally, trading off the intraday lows of 1.2418.
The outperformer during the European trading session was the British Sterling, which gained as much as 0.60% for the day, ahead of the US data. The Pound was boosted by a better than expected manufacturing PMI which also included a modestly upward revision to the previous month’s numbers.
The US markets opened after a holiday shortened session last week. PMI and ISM manufacturing data was on the tap with the PMI manufacturing coming in at 54.8 vs. consensus of 55 but modestly higher than last month’s 54.7. The markets did not react much to the news ahead of the ISM manufacturing data as well, which is also expected to show a slowdown to 58, from 59 previously. Actual data showed a modestly higher reading at 58.7.
The Greenback opened today’s session right near the main resistance of 88.45. A daily close below 87.55 could potentially see the Dollar Index head lower ahead of the ADP payroll data on Thursday and the Non-farm payments on Friday. At the time of release, the Greenback failed to show any signs of strength with the EURUSD and the GBPUSD managing to hold on to their daily gains.