EU PMI’s beat
UK PMi’s softer
Nikkei 2.24% Dax 1.28%
UST 10Y 0.54
Asia and the EU
EU Flash PMI 51.8 51.1
UK PMI 53.3 vs. 53.6
North America Open
US ISM Manufacturing 10:00
Markets were generally quiet on the first trading day of the week with equities mildly bid on the high tech side while the dollar was slightly higher across the board.
The only econ news of importance was the PMI data from Europe and the UK which showed an improvement in the diffusion indices as they moved above the 50 boom/bust line. In Europe, the flash PMI manufacturing reading printed at 51.8 vs. 51.1 beating the market forecast while in the UK it was slightly worse at 53.3 vs. 53.6 eyed but still comfortably in the ex[nasionary territory.
The data is confirming that economies in the region have returned back to work and according to Markit, “Whilst modest, the overall improvement in operating conditions signaled by the PMI was the first such occurrence recorded by the survey since February 2019. Moreover, growth was widespread, with all market groups registering PMI readings above 50.0 during July. Consumer goods was the best performing, registering the strongest expansion for over a year-and-a-half.”
The overall news provided a positive backdrop for equities which pushed higher as US corps entered the day, but high beta FX remind pressured on profit-taking flows as euro, cable, and Aussie were all down on the day.
In North America today the focus will be on ISM Manufacturing due at 1400 GMT with traders looking for a print of 53.6 vs. 52.6. However, new orders are expected to drop sharply from 56.4 to 46.8 and they do it could weigh on the dollar as US recovery will continue to seem weak in comparison to the rest of the industrialized world.
Otherwise, the main factors driving today will be the ongoing stalemate in Washington over the unemployment benefits with the latest suggestion being that Trump could take unilateral action on the matter – which would be seen as dollar positive as it will ensure that US stimulus remains in place.