Spreadex Market Update
Financial Market Update: Mixed PMIs and Market Movements
Markets experienced a mixed tone in July as US indices closed on a positive note, led by the S&P 500's impressive 5-month winning streak. However, concerns persisted over global growth as several key economic indicators came in either below or in line with expectations. The dollar gained ground despite contracting US PMI, while the euro faced pressure. Meanwhile, China's manufacturing sector saw its third contraction, lending support to gold prices. Global oil demand soared to an all-time high, contributing to WTI's 3-day winning streak.
Key Factors for Today
- S&P 500 extends its 5-month winning streak as US indices close July on a positive note.
- US PMI contracts further, but the dollar finds support with the Treasury's announcement of increased debt issuance.
- Eurozone macros align with expectations, but the euro faces pressure due to inflation concerns.
- China's manufacturing contracts for the third time, boosting gold prices.
- Global oil demand expected to hit an all-time high, supporting WTI's 3-day streak.
Market Movers
- USD/JPY rises 0.78% to 142.26, eyeing 143.00 early Tuesday and a 3-day winning streak.
- EUR/USD loses 0.20% as bulls fail to reclaim $1.1050, closing the session under $1.10.
- Gold witnesses an uptick to $1965/oz, adding 0.33%, but reverses early Tuesday, opening at $1950/oz.
- Crude prices increase 1.44% above $80/bbl, defending the handle brings $82.40/bbl into the spotlight.
Economic Calendar
- EA HCOB Manufacturing PMI
- S&P Global/CIPS Manufacturing PMI
- EA Unemployment Rate
- S&P Global Manufacturing PMI
- JOLTS Job Openings
- ISM Manufacturing PMI
- API Crude Oil Stock Change
The Big News
US PMI Contracts Further But Treasury Supports USD
The University of Chicago's US PMI showed a further contraction at 42.8, raising concerns about the economy facing headwinds. Tighter bank lending, as revealed by the Fed's SLOOS, added to these worries. Surprisingly, the dollar gained despite the contraction as the Treasury announced its plan to issue $1.0T in debt over the next three months, exceeding expectations. This move contributed to the dollar's strength and supported USD/JPY's 3-day winning streak.
Eurozone Macros Align With Expectations, Euro Pressured
Flash July Eurozone inflation came in slightly above expectations at 5.3%, though it remained below the prior rate. The core inflation rate, however, remained unchanged at 5.5%, which added to concerns about rising inflationary pressures. Additionally, the first look at Q2 GDP showed a 0.3% increase, in line with expectations. Despite the alignment with forecasts, the euro faced pressure, and EUR/USD lost 0.20% as it failed to break above $1.1050.
China Manufacturing Notches 3rd Contraction, Boosts Gold
China's manufacturing PMI came in slightly above expectations, but the general PMI disappointed, pointing to the sector's third contraction. This data added to concerns about global growth and supported gold prices, which witnessed an uptick to $1965/oz. However, the yellow metal reversed its gains early Tuesday, opening at $1950/oz.
Crude Demand at ATH, WTI Pulls 3-Day Streak Off
Global oil demand reached an all-time high, reaching an average of 102.8M boepd in July. Crude prices saw their largest increase since the start of last year, with WTI gaining 1.44% and surpassing $80/bbl. The spotlight now turns to $82.40/bbl as the next resistance level for crude prices.
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