Tuesday's Landscape Amid Surprising PMI Numbers
25 July 2023
Yesterday's macro calendar was dominated by a cascade of PMIs from major economies, and the data was far from uplifting. The Eurozone, the UK, and the US were in focus, and the PMI results predominantly fell short of market expectations. A lone beacon amid the gloom was the flash manufacturing PMI from the US, which defied forecasts, clocking in at 49 versus the anticipated 46.1. This performance was, however, dwarfed by the alarming downturn in Germany's flash manufacturing PMI, which plunged to 38.8. Not only was this a startlingly low figure, but it also marked the most abysmal reading since May 2020, a reminder of the pandemic's economic throes.
Tuesday presents a rather sparse macro calendar, with the CB Consumer Confidence from the US stealing the limelight. Forecasts are hinting at a figure of 112.9, but given Monday's surprises, traders will be on their toes.
Unsurprisingly, Monday's PMI deluge left its mark on currencies. The Euro bore the brunt of the impact, emerging as one of the weakest performers. Conversely, the New Zealand Dollar (NZD), Canadian Dollar (CAD), and Japanese Yen (JPY) showcased commendable strength. The US Dollar (USD), while showcasing a mixed performance, did manage to end on a high note. As the European session commenced on Tuesday, the USD found itself on the back foot, while the Australian Dollar (AUD) and the British Pound (GBP) claimed the top spots.
Transitioning to the world of indices, an upbeat atmosphere prevailed. Monday was, in essence, a buoyant day for the markets, and early signs indicate Tuesday may follow suit. The Dow Jones not only had an impressive run but also inked new long-term highs, now teetering around levels last seen in March and April 2022. Meanwhile, the NASDAQ found solace at its long-term trend line, and Germany's DAX is currently attempting to break free from its recent sideways movement, eyeing an upward trajectory.
Over in the commodities realm, optimism is palpable. Precious metals, after weathering a bearish phase, are staging a comeback. Silver, in particular, is rallying from the key support level at $24.5 per ounce. However, the day's standout performer is undoubtedly oil. Both benchmarks, especially Brent, are experiencing significant surges, revisiting levels last encountered at April's end in 2023.