The strongest to the weakest of the major currencies
The JPY is the strongest and the CAD is the weakest as the North American session begins. The USD is mostly higher as traders return from the 4th of July holiday.
Overnight, China’s Caixin Services Purchasing Managers’ Index (PMI) for June 2023 was reported at 53.9, marking the sixth consecutive month of expansion but representing a drop from the previous month’s 57.1. The Composite PMI also fell, from 55.6 to 52.5.
Earlier in the week, the Caixin Manufacturing PMI was reported at 50.5 for June, a slight dip from the previous month’s 50.9, but still indicating expansion. The Caixin PMIs, which cover more small and medium-sized enterprises compared to the NBS’ PMIs, indicate that while there is ongoing growth, the pace of recovery is slowing down.
Overall in China, the services sector continues its post-Covid rebound, although the rate of recovery seems to be losing momentum. Meanwhile, the manufacturing sector continues to face challenges, including a contraction in employment, mounting deflationary pressure, and decreasing optimism. China’s recovery is still searching for stable ground amid issues like weak demand, lack of internal growth drivers, and dimming prospects.
In the European session today, there were several important economic data releases across Europe. French Industrial Production for the month showed a 1.2% increase, outperforming expectations of a -0.3% drop and surpassing the previous month’s 0.8% gain. In Spain, the Services Purchasing Managers’ Index (PMI) came in lower than expected at 53.4, compared to forecasts of 55.8 and the previous reading of 56.7. Italy’s Services PMI also underperformed, with a reading of 52.2, falling short of the predicted 53.0 and the previous month’s 54.0.
In contrast, French and German Final Services PMI remained steady at 48.0 and 54.1 respectively, matching their expected values. For the Eurozone as a whole, the Final Services PMI was slightly lower than anticipated at 52.0, compared to forecasts and previous figure of 52.4.
In the UK, the Final Services PMI reported was in line with expectations at 53.7, identical to the previous month’s value. Lastly, the Eurozone’s Producer Price Index (PPI) saw a month-on-month decrease of -1.9%, slightly better than the expected -1.7%, but still a considerable drop from the previous -3.2%.
U.S. stock futures are moving lower as traders return to work from Pickleball games, barbecues, fireworks and pool parties. The Federal Reserve’s last policy meeting minutes will be released later today. The Fed kept rates unchanged but signaled at least 2 more 25 bps hikes. The China services sector data is also leading to some anxiety in equity markets.
Crude oil is higher despite global economic slowdown worries. News of more output reductions from Saudi Arabia and Russia are helping the tone but the price remains in an up-and-down range from around $66 to $75. Saudi Energy Minister said that OPEC+ will do “whatever is neccesary” to support the market, and that the market will “not be left unattended”.
US factory orders are expected to increase by 0.8% in May and will be released at 10 AM ET.
A snapshot of the markets currently shows:
- Crude oil is trading u $1.44 at $71.23
- Spot gold is trading up $2.49 at $1927.70
- Silver is down -$0.06 at $22.85
- Bitcoin is trading at $30,428
In the premarket for US stocks, the major indices are trading lower in premarket trading. The major indices were modestly higher on Monday’s shortened session. Today, those gains have been gobbled up and then some:
- Dow Industrial Average is trading down -172 points after Friday’s 10.87 point rise
- S&P index is trading down -23 points after Friday’s 5.21 point rise
- NASDAQ index is trading down -89 points after Friday’s 28.85-point rise
In the European equity markets, the major indices are trading lower
- German DAX is down -0.59%
- France’s CAC is down -0.63%
- UK’s FTSE 100 is down -0.59%
- Spain’s Ibex is down -0.59%
- Italy’s FTSE MIB is down -0.24% (delayed)
In the Asian Pacific market today, markets closed higher
- Japan’s Nikkei fell -0.25%
- Australia’s S&P/ASX 200 index fell -0.35%
- China’s Shanghai composite index fell -0.69%
In the US debt market yields are continuing it’s run higher
- 2-year yield 4.909% unchanged
- 5-year yield 4.179% +0.7 basis points
- 10-year yield 3.862% +0.2 basis points
- 30-year yield 3.884% +1.7 basis points
In the European debt market, benchmark 10-year yields are mostly lower