Quick Update: ISM mnufacturing beat expectation and rose to 57.1 in July.
Dollar has some knee jerk reaction after disappointment from US employment data. But there is no follow through selling in the greenback and it quickly recovered. Outlook in dollar stays bullish in general in spite of the sharp retreat. Non-farm payroll report showed 209k growth in July, below expectation of 230k. Prior month’s figure, meanwhile, was revised higher from 288k to 298k. Unemployment rate also missed expectation and rose to 6.2%. Also released from US, personal income rose 0.4% in June while spending rose 0.4%. Core PCE dropped to 1.6% yoy.
Sterling weakened broadly today as UK PMI manufacturing unexpectedly dropped to 55.4 in July, missing expectation of 57.2. That’s the lowest level since July 2013. Markit noted that “the combined effects of expected policy tightening, heightened economic uncertainty and sluggish trade could mean manufacturing growth could suddenly weaken more than expected”. And, it’s not “too early to gauge the impact of the Ukraine crisis”. Also released from Europe, Eurozone PMI manufacturing was revised lower to 51.8 in July. Italy manufacturing dropped to 51.9 in July versus expectation of 52.8.
Released earlier today, Australia PPI missed expected and dropped -0.1% qoq in Q2, and slowed to 2.3% yoy. China official manufacturing PMI rose to 51.7 in July, better than expectation of 51.4. HSBC manufacturing PMI was revised lower to 51.7.
Daily Pivots: (S1) 1.6851; (P) 1.6888; (R1) 1.6921; More…
GBP/USD drops further to as low as 1.6802 so far today and intraday bias remains on the downside. As noted before, a medium term top could be formed at 1.7190 already and the trend is reversing. Deeper fall should be seen to 1.6692 key support level for confirmation. On the upside, above 1.6894 minor resistance will turn bias neutral and bring consolidations. But recovery should be limited below 1.7058 resistance and bring fall resumption.
In the bigger picture, price actions from 1.3503 (2009 low) are treated as consolidations to long term down trend from 2.1161. Based on unconvincing medium term momentum, we’d expect strong resistance from 50% retracement from 2.1161 to 1.3503 at 1.7332 to limit upside and bring reversal. Sustained break of 1.6692 will indicate medium term reversal and would turn outlook bearish for 1.4813 support.
Manufacturing PMI Jul
PPI Q/Q Q2
PPI Y/Y Q2
HSBC Manufacturing PMI Jul F
Italy Manufacturing PMI Jul
Eurozone Manufacturing PMI Jul F
UK PMI Manufacturing Jul
Change in Non-farm Payrolls Jul
Unemployment Rate Jul
Personal Income Jun
Personal Spending Jun
PCE Core M/M Jun
PCE Core Y/Y Jun
U. of Michigan Confidence Jul F
ISM Manufacturing Jul
ISM Prices Paid Jul
Construction Spending M/M Jun