Daily Analysis Report 24 June '2022
After experiencing a rather significant decrease the day before, the European currency is now growing moderately. While the underlying outlook for the market changes marginally, investors are reducing some of their already initiated short bets to get ready for the weekend. Macroeconomic data showed a fall in the S&P Global Manufacturing PMI for June from 54.6 to 52.0 points the day prior, worse than the market’s projection of 53.9 points, and a correction in the Services PMI from 56.1 to 52.8 points compared to the forecast of 55.5 points. The manufacturing PMI in Germany decreased from 54.8 to 52.0 points, while the services PMI fell from 55.0 to 52.4 points.
The region’s persistently rising inflation is noticed against the backdrop of the negative dynamics, and the European Central Bank (ECB) will only begin a cycle of interest rate increases in July. Analysts worry that the regulator has lost valuable time and will try to catch up with price inflation by sharply raising rates by 75 basis points, following the US Federal Reserve.
The British pound is stabilizing near 1.2270 while moving in several ways. The GBP/USD currency pair is poised to close the week with a small gain, but the instrument’s long-term prospects are incredibly unclear. Although yesterday’s macroeconomic numbers in the UK were better than anticipated, there was no discernible improvement in the value of the national currency. Contrary to expectations, the S&P Global Services PMI in June stayed at 53.4 points, while the Manufacturing PMI dropped from 54.6 to 53.4 points while expectations were expecting a drop to 53.7 points.
Investors are currently concentrating on the May statistics for Retail Sales dynamics: every month, the indicator decreased by 0.5 percent, which was better than initial market estimates of 0.7 percent, while on an annualized basis, the negative dynamics increased from -4.5 percent to -4.7 percent. Huw Pill and Jonathan Haskel, two representatives of the Bank of England, are anticipated to speak during the day.
Recovering from the losses of the previous two “bearish” sessions, the Australian dollar exhibits corrective growth. With assistance from strengthening corrective moods in the US dollar, the instrument is once again testing the level of 0.6900 in preparation for a breakthrough. Investors are scrambling to lock in profits and responding to the release of US macroeconomic numbers that are pretty subpar. The US Services sector’s business activity index fell from 53.4 to 51.6 points, contrary to experts’ expectations for an increase to 53.5 points, according to data provided the day before by S&P Global. The Manufacturing PMI dropped dramatically from 57.0 to 52.4 points, which was also significantly worse than the market had anticipated.
While the estimate was for a level of 53.7 points, the Composite PMI in June corrected from 53.6 to 51.2 points. Jerome Powell, the chairman of the US Federal Reserve, spoke before the US Senate yesterday, adding to the pressure on the markets by highlighting the dangers of rising inflationary pressure in the nation while also acknowledging the possibility of a recession as a result of the regulator’s “hawkish” stance. The Fed also plans to tighten monetary policy further to bring the consumer price index back to its desired goal of 2%.
The US dollar is falling as Wednesday’s “bearish” market momentum continues. The instrument is checking for a breakdown at 134.80, following the release of relatively flimsy macroeconomic numbers from the US the day before. The report showed that economic activity in the Manufacturing and Services sector declined in June, substantially worse than analysts had anticipated. Initial Jobless Claims for the June 17 showed a slight reduction from 231K to 229K, which was just slightly more than the projected 227K.
Investors are focusing on information from Japan right now. The National Consumer Price Index increased by 2.5 percent in May, matching the data from the previous month, despite analysts’ expectations for faster acceleration to 2.9 percent. The market anticipated growth of only 0.4 percent, but the CPI excluding Food and Energy grew by 0.8 percent.
Gold prices are stabilizing following an attempt to decline the day before, which caused XAU/USD to update regional lows from June 16. Due to technical reasons, the instrument is currently trading at 1825.00. The US Federal Reserve Chairman’s address, in which he acknowledged the risks of a recession for the American economy but reiterated the regulator’s commitment to stick with its hiking interest rates until inflationary pressure stabilizes, put additional pressure on the asset. The official also highlighted stagflation, a recently hotly debated subject in the market.
Although he believes such hazards shouldn’t be ignored, they are currently difficult to identify and can vary significantly depending on the calculation models. In turn, yesterday’s dismal macroeconomic data on June’s US business activity helped bolster the price of gold. Accurate data turned out to be substantially worse than analysts had predicted, raising the possibility of slowing the nation’s economic growth.