The JPY is the strongest and the GBP is the weakest as the NA session begins

The JPY is the strongest and the GBP is the weakest as the North American session begins.The USD is mostly, but moderately higher as US traders enter for the day.The flash manufacturing and services data was dumped this today in Europe and the UK. The UK data was the worse than expectations for both the manufacturing and the service sectors. The EU data for manufacturing was better but still well below the 50 level. The services PMI in the EU were all worse than forecast and ALL were below the 50.0 level which is indicating contraction in both sectors. BEARISH.

  • J.P. Morgan now expects CCB to pause rates in September and postpone a final 25 basis point hike until October.
  • Tesla said that they will lower production targets at their German plant to 4,350 per week versus 5,000 per week in March and also plans to reduce it further going forward.
  • City coded 2023 global economic growth forecast to 2.4% from 2.5%

Below is a summary of the PMI data out of Europe

Manufacturing PMI:

  • French Flash: BETTER – Actual: 46.4, Forecast: 45.1, Prior: 45.1
  • German Flash: BETTER- Actual: 39.1, Forecast: 38.9, Prior: 38.8
  • EUR Flash: BETTER – Actual: 43.7, Forecast: 42.8, Prior: 42.7
  • GBP Flash: WORSE – Actual: 42.5, Forecast: 45.1, Prior: 45.34

Services PMI:

  • French Flash: WORSE – Actual: 46.7, Forecast: 47.5, Prior: 47.14
  • German Flash: WORSE – Actual: 47.3, Forecast: 51.5, Prior: 52.34
  • EUR Flash: WORSE – Actual: 48.3, Forecast: 50.6, Prior: 50.94
  • GBP Flash: WORSE – Actual: 48.7, Forecast: 50.9, Prior: 51.5

The data sent the EURUSD and GBPUSD to the downside with the EURGBP rising sharply after initially falling to a new low for the year and lowest level since August 2022. The price is testing the 38.2% retracement of the move lower from the August high. That level comes in at 0.8559. The high for the day just reached 0.85595. Getting above that level and the Monday high at 0.8562, opens the door for further upside potential toward the 50% midpoint at 0.85796 (see chart below).

US Mortgage data for the week of August 18th was released in the US today. They showed weakness once again as the impact from rates and affordability kick in (it should only get worse as rates are now more near 7.5% for a 30 year mortgage). A summary shows:

  • MBA Mortgage Applications: LOWER – Actual: -4.2%, Prior: -0.8%
  • Mortgage Market Index: LOWER – Actual: 184.8, Prior: 193.0
  • MBA Purchase Index : LOWER- Actual: 142.0, Prior: 149.5
  • Mortgage Refinance Index: LOWER- Actual: 397.1, Prior: 408.4
  • MBA 30-Yr Mortgage Rate: HIGHER- Actual: 7.31%, Prior: 7.16%

US stocks are trading modestly higher after mixed results yesterday showed the Dow industrial average and the S&P indices lower while the NASDAQ was marginally higher. Today after the close the focus will be on Nvidia as they announce their earnings. Their results and future projections are important for shaping the trajectory of the AI trend and the overall market mood. Nvidia shares are trading at $459.20 up from the closing level of $456.68. For a technical look at the stock and key levels through the release, see my video from yesterday.

Ahead of the Jackson Hole Summit which will begin tomorrow and reach its peak on Friday when Fed chair Powell addresses the conference at 10:05 AM ET, Richmond Fed President Thomas Barkin stated that the Federal Reserve should be prepared for a potential resurgence in the U.S. economy, even after a series of significant interest rate hikes designed to control inflation and decelerate growth. Barkin highlighted recent data indicating strong retail sales and growing consumer confidence, suggesting the economy might remain robust despite high prices. He mentioned that this could lead to outcomes other than just a recession or a “soft landing.” Barkin’s comments hint at the possibility of further monetary policy adjustments. Other Fed members will be speaking along with international central bankers at the conference starting tomorrow. US yields are lower this morning despite the more hawkish tilt

A snapshot of the markets as the NA session gets underway shows:

  • Crude oil is trading down $1.17 or -1.48%
  • Spot gold is trading up $7.23 or 0.38% at $1904.45
  • Spot silver is trading up $0.45 or 1.94% at $23.85
  • Bitcoin is trading at $25,948. At this time yesterday morning the price was trading at $26,024

In the US premarket for US stocks, major indices are trading margin higher. The snapshot of the major indices shows:

  • Dow Industrial Average futures are implying a gain of 48.17 points after yesterday’s -174.86 point decline
  • S&P index futures are implying a gain of 8.5 points after a decline of -12.22 points yesterday
  • NASDAQ futures are implying a gain of 35 points after a gain of 8.28 points yesterday

In the European equity markets, the major indices are trading marginally higher

  • German DAX, up 0.06%
  • France’s CAC, up 0.05%
  • UK’s FTSE 100, up 0.75%
  • Spain’s Ibex, up 0.22%
  • Italy’s FTSE MIB, up 0.09% (delayed)

In the Asian Pacific today, equity markets closed mixed

  • Japan’s Nikkei 225, rose 0.4%
  • China’s Shanghai Composite, fell -1.34%
  • Hong Kong’s Hang Seng, rose 0.31%
  • Australia’s S&P/ASX 200, rose 0.3%

In the US debt market, yields are mostly modestly lower after rising yesterday. .

  • 2-year yield, 5.003% -3.4 basis points
  • 5-year yield, 4.430% -4.8 basis points
  • 10-year yield, 4.274% -5.3 basis points
  • 30-year yield, 4.365% -4.5 basis points

In the European debt market, benchmark 10-year yields are trading sharply lower after the weaker dated today:

This article was written by Greg Michalowski at Source