The USD strengthens, oil prices are firm, while equity markets & US yields are mixed ahead of a busy week of earnings, and central bank meetings. Markets are little changed in early trading as investors are sidelined ahead of a batch of key earnings reports and major policy decisions from the Federal Reserve and European Central Bank this week. Markets are positioning for the Fed & the ECB to raise interest rates this week and are expected to signal whether more hikes are likely after record tightening campaigns. This week the focus will be on US earnings from Alphabet Inc., Exxon Mobile. and Meta. Today's focus will be on the S&P Global Composite, Manufacturing & Services PMI will help provide intraday direction to currency markets.
In other news. Spain faces uncertain political future after election deadlock. China Politburo unveils steps to spur private investment. Eurozone business downturn deepens far more than thought in July - PMI. Russia accuses Ukraine of 'terrorism' after drone strike near Moscow army HQ. G20 bloc fails to reach agreement on cutting fossil fuels. Argentina to weaken peso with trade taxes in a bid for IMF funds. Ukraine war casts a shadow over Putin's summit with African leaders. Canada, Nova Scotia Premier vows to rebuild province amid catastrophic flooding.
In currency news. Euro weakens after weaker-than-expected PMI data and focus shifts to the ECB this week. China's Yuan eases after Politburo stimulus news. Argentina's Peso tests a new historical low vs USD as taxes hike for IMF funds. CNY and Asian currencies slipped 0.1% on average vs US$. Trading currencies are mixed with NOK & SEK weakening 0.3%, ZAR falling 0.2%, while CHF is flat, NZD up 0.2%, JPY & MXN advancing 0.4%, AUD firming 0.5% vs USD.
Oil prices firm in early trading as tightening conditions as Saudi oil output cuts are starting to impact market supply. CAD firms through 1.32 in early trading as commodity prices advance in early trading on escalating attacks on Ukraine ports and threats to shipping from Russia in the Black Sea. This week sees just CAD GDP on Friday, so the loonie will be at the mercy of US data releases and the FED rate decision to provide direction. Today US data and commodity prices will help provide intraday direction.
EURCAD weakens in early trading, with the weakness being triggered by the weaker-than-expected Eurozone PMI data.
Euro tumbles below 1.1100 after dismal German and Eurozone PMI results. The weaker-than-expected German & Eurozone PMI data for July revealed a sharp contraction in the private sector's business activity. Chief Economist at HCOB said, "There is an increased probability that the economy will be in recession in the second half of the year". and went on to say "This is because our GDP forecast for Q3, points to negative growth'". Intraday US PMI data will be a driver for the currency market's direction today.
GBPEUR edges higher as Eurozone PMI disappoints markets more than the weaker UK PMI results.
GBP weakens towards 1.2800 after disappointing UK PMIs. The pounds weakened through 1.2850 after the UK services PMI fell below estimates of 53, printing a weaker-than-expected 51.5. At the same time, the Composite and Manufacturing PMIs also fell below expectations indicating that the UK economy has come close to stalling in July, combined with gloomy forward-looking indications of recession concerns. Focus now shifts to the US PMI data ahead of this week's ECB & Fed rate decisions and next week's BoE interest rate decision.
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