US Open Note – Stocks return to Asia opening levels and dollar a tad lower

Market sentiment on back foot ahead of US ISM Manufacturing PMI

US major indices have given up their Asian price improvements, as sentiment deteriorates on US infrastructure talks and in advance of the US ISM Manufacturing PMI, scheduled for 14:00 GMT today.

Friday’s US mixed data may have also played a part, which reflected that consumer sentiment in July declined further from the levels in June with inflation expectations also slowing. Employment pay for Q2 was lower and the Core PCE price index m/m showed June’s prices also fell behind. The market seems to have remained glued to the dovish premise from Chairman Powell’s press conference around interest rates rather than shifting towards the mentioning of tapering. Investors are expecting a rise in volatility in the forex arena linked to a reaction in the now modestly weakened dollar, around the release of today’s US important data.

Japan’s PMI figures and consumer confidence grew stronger in July, rising to 53.0 and 37.5 against their respective estimations of 52.4 and 37.0, signalling a pickup in the recovery. The USD/JPY pair has slipped below the 109.50 level, as the upbeat yen has muted the dollar’s strength today ahead of the ISM PMI data.

Other big market players

The euro’s buoyancy has fallen short of the $1.1900 level and the pound is largely unchanged just beneath the $1.3900 mark, as the king dollar retains a lethargic demeanour ahead of the US ISM Manufacturing PMI.

The pound’s resilience could be linked to a fall in new infections from the Delta variant and a softened legal stance from the EU towards the Northern Ireland border.

Across the channel, the euro received a booster jab from strong Manufacturing PMI in Spain, Italy, France and even more so from continued positive momentum in Germany. Although there were slight misses in the former three mentioned locations, the figures for July remained elevated near June’s levels with the Eurozone final PMI beating the forecast of 62.6, coming in at 62.8. The results show a continued expansion in July even though slowed production still lingers due to supply-side delays.

RBA decision tomorrow; China’s pace slows

China’s PMI figures signalled that the recovery remained in an expansionary phase but adopted a slightly slower pace, something confirmed by China’s weaker Caixin Manufacturing PMI today at 50.3 versus the forecast of 51.1.

Mixed Australian data today signalled a sluggish Australian manufacturing industry, although the economy remains in a robust expansionary vibe. In spite of renewed lockdowns the country’s MI inflation gauge for July was 0.1% higher m/m. Nonetheless, China’s weaker Caixin manufacturing PMI has not aided the AUD/USD pair and the expected upbeat US ISM Manufacturing PMI for July may further weigh on the pair. Tomorrow, the Australian monthly building approvals as well as the tone of the Reserve Bank of Australia on interest rates and tapering may play a different tune for the aussie. The AUD/USD pair is currently trading around 0.7360.

WTI oil futures are marginally beneath the $73.00 per barrel mark and gold is testing the $1,806/oz barrier.

At 14:00 GMT, the US ISM Manufacturing PMI - together with its subcomponents - and Construction Spending are due.

Then, later at 23:30 GMT Japan’s CPI is scheduled, while at 01:30 GMT, Australian monthly building approvals are expected. The RBA will announce its rate decision and issue its statement around 04:30 GMT.

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.