Recession Fears Grip Financial Markets

Global Flash PMIs Disappoint, EUR/USD Takes a Dive

June's Flash Manufacturing PMIs across major economies fall below expectations, sinking deeper into contraction territory. Eurozone Manufacturing PMI, at 43.6, misses the projected 44.8, marking its worst performance since the pandemic-induced contraction. The drop is attributed to higher borrowing costs. These disappointing results weigh on investor sentiment worldwide. In the US, the June Flash PMI also enters negative territory, falling to 46.3, below the expected 48.7. As a consequence, the EUR/USD pair experiences a significant decline on Friday, reaching $1.0840, although it manages to recover slightly to close 0.60% lower at $1.0890. Short-term support for the pair lies above $1.0825, while resistance can be found at Friday's opening level.

Aussie Tumbles 1.22% As Australia Faces Headwinds

The Australian dollar suffers a 1.22% drop against the US dollar on Friday due to a combination of increased interest in the greenback and concerns about Chinese demand for raw material imports. The AUD/USD pair concludes the week at $0.6674, with the next support level expected at $0.6615 unless bullish activity drives a reclaim of 67 cents.

WTI Plunges 3% Only to Recover

Hopes of increased oil demand following Beijing's stimulus package fade as China's slow economic recovery fails to significantly boost the industrial and transport sectors. Speculative funds continue to short the market, leading to a 3% plunge in WTI prices on Friday. The decline, accentuated by the BOE's double hike and PMI contraction, sees prices falling to $67.40/bbl, 3% below the opening of $69.50/bbl. However, support from weekly-close flows helps recover the prices.

UK Retail Sales Help Offset PMI Drop in Cable

May's retail sales in the UK surprise on the upside, growing by 0.3% while an expected decline of -0.3% had been forecasted. This positive outcome helps counterbalance the decline in the UK composite PMI, which reveals a drop to 52.8 from 54.0, compared to the expected 53.2. Both the Services and Manufacturing sectors experience setbacks, with Manufacturing entering contraction territory at 46.2 against the projected 46.5. The Cable taps below the $1.27 handle but manages to close at $1.2715, still below the opening of $1.2748. The currency could accelerate if an attempt is made at $1.28 unless support is lost, which would expose $1.2661.