The JPY is the strongest and the CAD is the weakest as the North American session begins

The Japanese Yen is the strongest and the Canadian dollar is the weakest as the North American session begins. The greenback mostly rallied as traders returned from the 4th of July holiday.

Overnight, China’s Caixin Services Purchasing Managers’ Index (PMI) for June 2023 was reported at 53.9, the sixth consecutive month of expansion but down 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, which is down slightly from the previous month’s 50.9, but still points to expansion. The Caixin PMIs, which cover more small and medium-sized companies than the NBS PMIs, suggest that while there is continued growth, the pace of recovery is slowing.

Overall in China, the service sector continues its post-Covid recovery, although the rate of recovery appears to be losing momentum. Meanwhile, the manufacturing sector continues to face challenges, including shrinking employment, mounting deflationary pressures, and reduced optimism. China’s recovery is still looking for a stable footing amid issues such as weak demand, lack of internal growth drivers and clouding prospects.

In today’s European session, there were many important economic releases across Europe. French Industrial Production for the month showed an increase of 1.2%, beating expectations for a decline of -0.3% and topping the previous month’s gain of 0.8%. 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, printing at 52.2, lower than the expected 53.0 and the previous month’s 54.0.

In contrast, the French and German final services PMIs held 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 expected at 52.0, compared to forecasts and the previous figure of 52.4.

In the UK, the Final Services PMI report came in in line with expectations at 53.7, matching the previous month’s value. Finally, Eurozone producer price index (PPI) saw a month-on-month decline of -1.9%, slightly better than the expected -1.7%, but still a significant drop from the previous -3.2%.

US stock futures are falling as traders get back to work from pickleball games, barbecues, fireworks and pool parties. The minutes of the Fed’s latest policy meeting will be released later today. The Fed kept interest rates unchanged, but signaled at least additional increases of 25 basis points. China’s service sector data is also causing some concern in stock markets.

Crude Oil rose despite fears of a global economic slowdown. News of further production cuts from Saudi Arabia and Russia helps the tone, but the price remains in an up-and-down range from around $66 to $75. The Saudi energy minister said that OPEC+ would do “whatever is necessary” to support the market, and that the market would “not be left unattended”.

US Factory Orders are expected to increase by 0.8% in May and will be released at 10AM ET.

A snapshot of the markets currently showing:

• Crude Oil is trading down $1.44 at $71.23
• Spot gold is trading $2.49 higher at $1927.70
• Silver is down – $0.06 at $22.85
• Bitcoin is trading at $30,428

In the primary market for US stocks, the major indices are trading lower in pre-market trading. Major indices rose slightly in Monday’s brief session. Today, those gains have been eaten up and then some:

• The Dow Industrial Average is trading down -172 points after Friday’s high of 10.87 points
• The S&P is trading down -23 points after gaining 5.21 points on Friday
• The Nasdaq is trading down 89 points after Friday’s high of 28.85 points

In European stock markets, major indices are trading lower

• German DAX fell -0.59%
• France’s CAC fell -0.63%
• Britain’s FTSE 100 fell -0.59%
• Spanish Webex fell 0.59%.
• Italy’s FTSE MIB Down -0.24% (Late)

In today’s Asia Pacific market, markets closed higher

• Japan’s Nikkei fell -0.25%
• Australia’s S&P/ASX 200 fell -0.35%
• China’s Shanghai Composite Index fell 0.69%.

Yields in the US debt market continue to rise

• The two-year return is 4.909%, unchanged
• 5-year yield of 4.179% +0.7 basis points
• The 10-year yield is 3.862% +0.2 basis points
• 30-year yield of 3.884% +1.7 basis points

In the European debt market, 10-year bond yields are often lower