The impact of the global PMI dump on overall market sentiment!
The results were mostly stronger than expected, with the exception of some failures from Germany and the UK economy. A few positive reviews have been announced for previous releases as well.
Here's how the major currency pairs and asset classes performed.
Titles:
- May Australian flash manufacturing PMI: 49.6 (previously 49.6)
- Australian Services PMI for May: 53.1 (53.6 expected)
- New Zealand's core retail sales Q1: 0.5% QoQ (-0.3% expected, -1.8% previously)
- New Zealand quarterly core retail sales for Q1: 0.4% q/q (0.0% expected, -1.6% previously)
- Japan May Manufacturing PMI: 50.5 (49.7 expected, 49.6 previously)
- Australia's April MI inflation expectations for the next 12 months slowed from 4.6% to 4.1%
- French Manufacturing PMI for May: 46.7 (45.8 expected, previous reading upgraded from 44.9 to 45.3)
- French Flash Services PMI for May: 49.4 (51.8 expected, previous reading upgraded from 50.5 to 51.3)
- German Manufacturing PMI for May: 45.4 (43.4 expected, 42.5 previous)
- German Services PMI for May: 53.9 (53.5 expected, 53.2 previous)
- Eurozone manufacturing PMI: 47.4 (46.2 expected, 45.7 previous)
- Eurozone flash services PMI: 53.3 (53.6 expected, previous reading upgraded from 52.9 to 53.3)
- UK Manufacturing PMI for May: 51.3 (Expected 49.5, previous reading upgraded from 48.7 to 49.1)
- UK Flash Services PMI for May: 52.9 (54.7 expected, 55.0 previous)
- US Initial Jobless Claims: 215K (220,000 expected, 223,000 previous)
- US Manufacturing PMI for May: 50.9 (50.0 expected, 50.0 previous)
- US Flash Services PMI for May: 54.8 (51.2 expected, previous reading upgraded from 50.9 to 51.3)
- Japan National Core CPI for April: 2.2% y/y (2.2% expected, 2.6% previous)
Broad market price movement:
Dollar Index, Gold, S&P 500, Oil, 10-Year US Yields, Bitcoin Overlay Chart by TradingView
Market correlations appear to have broken down during the Asian trading session, as crude oil and gold traded lower while the S&P 500 rose.
Meanwhile, Treasury yields and the US dollar were moving cautiously as traders braced for flash US PMI readings due later in the day. Bitcoin price action was also relatively quiet until the start of the London session, while traders digested mixed but generally upbeat Purchasing Managers' Index (PMI) readings from Europe.
Eventually, oil found an intraday bottom and then continued to advance to the $78.50 per barrel area before falling again. On the other hand, Bitcoin and gold fell while US yields rose after seeing stronger than expected US PMI numbers.
Forex market behavior: US dollar against major currencies
Overlay of the US dollar against major currencies Chart by TradingView
Consolidation was the name of the game for the majority of dollar pairs leading up to the global PMI releases, with the exception of the New Zealand dollar which got off to a steady start thanks to stronger than expected quarterly retail sales numbers.
Volatility then rose for the Euro, with preliminary PMI readings starting to come in stronger than expected mostly for France and Germany. Later, the pound fell after seeing a weaker-than-expected UK services PMI figure but quickly pared losses.
Bullish surprises in Uncle Sam's May manufacturing and services PMI readings sent the dollar higher across the board, with the numbers likely highlighting plans by Federal Reserve officials to keep interest rates higher for longer.
The US currency was able to maintain its gains after the Purchasing Managers' Index (PMI), especially against the Canadian dollar, Australian dollar and British pound.
Potential catalysts coming on the economic calendar:
- UK retail sales at 6:00 AM GMT
- SNB President Jordan Speech at 10:45 pm GMT
- Canadian Retail Sales at 12:30 PM GMT
- US Durable Goods Orders at 12:30 PM GMT
- FOMC Member Waller's speech at 1:35 PM GMT
- UoM revised its Consumer Confidence Index at 2:00 PM GMT
There are not many top-tier market catalysts today, so mid-tier releases such as retail sales numbers from the UK and Canada may attract traders' attention.
Keep your eyes and ears peeled for hawkish comments from FOMC Member Waller, as well as potential upgrades to the University of Michigan Consumer Confidence reading, which could spur additional gains for the USD as well!
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