PMI

For the first week in a while, US data is not dominating the market focus. With a key US inflation report and FOMC meeting freshly in the rear-view mirror, markets can now shift attention to domestic data. Three top-tier central banks meet next week, including the RBA on Tuesday, followed by the Swiss National Bank (SNB) and Bank of England (BOE) on Thursday. UK inflation data on Wednesday could set the tone for what to expect at future BOE meetings. Flash PMIs across Asia, Europe, and the US then close out the week, which can shape expectations for future growth and inflationary pressures.

EURUSD Outlook: Following the slight cooling of U.S inflation, markets embraced a euphoric sentiment. Will the upcoming FOMC minutes calm it down or amplify it further?

For this week, Eurozone PMIs and central bank speakers will be the big focus - see the key levels to watch on EUR/USD!

S&P global release their flash PMI reports for the major regions today. And with PMI reports from Europe and US, it places EUR/USD onto trader's radars.

Last week we noted that bond yields could trump economic data this week, and for the most part they did. We can also extend that comment into next week, especially if they continue to retreat and loosen their grip on bearish sentiment and allow risk assets to rebound. Highlights in next week’s calendar include the NFP and ISM PMI reports, RBA and RBNZ monetary policy meetings, the quarterly Tankan survey for Japan and Canada’s employment report.

Whilst the Fed are expected to hold rates steady in September, next week’s FOMC meeting also includes the quarterly staff projections. And changes to dot plot or CPI estimates can be as good as a hike where market reactions are concerned. The odds of another BOE are next week are not as high as they were, which makes the preceding inflation report paramount to expectations for their next decision. And whilst the BOJ are unlikely to act, that is no reason to drop your guard given their tendency to surprise once in a while. We also have flash PMIs for major regions and inflation data to mull over.

The Bank of Canada (BOC) are expected to hold rates at today’s meeting, given GDP unexpectedly contracted in Q2. Still, implied volatility has spiked higher for USD/CAD. Perhaps the BOC pause will not be as dovish as expected, Fed members tout a hold or the rise of bond yields (and therefore the US dollar) lose steam. If so, USD/CAD may be better for short bets beneath the April highs.

With policymakers continuing to rollout stimulus measures, it’s questionable whether the USD/CNH pop will last.

EUR/GBP sold off aggressively after the UK posted a stronger flash PMI than that of the Euro Area.

The National Bureau of Statistics China (NBS) released PMI data this week which shows both the manufacturing and services sector are expanding.

China’s PMI beat expectations and expanded, which could give global growth prospects a boost as China continues to reopen

There were some downside surprises with French and UK services, and German manufacturing, all disappointing expectations

Markets are focusing on the Average Hourly Earnings data for December, which was lower than expected. But will the Fed see it as dovish as the markets?

Economic activity remains rooted deeply in negative territory, due to the soaring cost of living, rising interest rates and elevated levels of uncertainty.

Poor PMI data underscore the challenges central banks face at a time when inflation remains very high

Poor PMI data underscore the challenges central banks face at a time when inflation remains very high

Futures suggest the FTSE could challenge the 7,000 resistance level, but we also have flash PMI data in focus for the UK, Europe and US.