Week Ahead: Markets to Focus on Manufacturing PMI and Services PMI

Make informed decisions with the most up-to-date and reliable financial data, exclusively provided by vtmarkets.com.

What happened in the market last week?

Retail and manufacturing data surpassed expectations; residential construction gained momentum.
FOMC minutes acknowledged a strong economy, focused on reducing inflation.
UK GDP report showed good performance in H1 despite persistent inflation.
China’s economy weakened due to disappointing retail sales and industrial production.
10-year US Treasury yield reached a 15-year high.

Source: VT Markets MT4

Last Week Market Pair Changes (All data is taken from the MT4 VT Markets)

The US dollar remained largely unchanged on Friday, poised for its fifth consecutive week of gains, which marks its longest winning streak in 15 months. The dollar’s strength is driven by its status as a safe-haven asset amid concerns about China’s economic situation and expectations of sustained high US interest rates. This rally is attributed to the solid performance of the US economy, which has led the market to postpone expectations of a Federal Reserve easing. Minutes from the Fed’s recent meeting indicated concerns about significant upside inflation risks, and strong economic data, particularly retail sales, has bolstered the case for further tightening.

DJ30 decreased by 2.41%.
NAS100 decreased by 2.35%.
USOUSD decreased by 2.33%.
XAUUSD decreased by 1.22%.
EURUSD decreased by 0.72%.
GBPUSD increased by 0.31%.
USDJPY increased by 0.43%.
USDX increased by 0.61%.

Source: VT Markets Economic Calendar

What to focus on this week?

This week, key economic players such as Germany, the UK, and the US will publish their flash manufacturing PMI and flash services PMI figures. These releases have the potential to impact market volatility. We advise traders to stay cautious and keep an eye on the latest updates.

Here are some notable highlights for the week:

Flash Manufacturing PMI for Germany, the UK, and the US (23 August 2023)

Germany’s manufacturing PMI declined from 40.6 in June 2023 to 38.8 in July 2023, marking deteriorating business conditions within the country’s manufacturing sector. This figure for July is also the lowest reading since May 2020.

Meanwhile, the UK’s manufacturing PMI for the same period fell from 46.5 to 45.3. In contrast, the US’ manufacturing PMI for the same period increased from 46.3 to 49.

The next set of data will be released on 23 August. Analysts’ predicted manufacturing PMIs are 38.6 for Germany, 46.2 for the UK, and 49.5 for the US.

Takeaway: We anticipate the upcoming release of Manufacturing PMI data for Germany, the UK, and the US, which will provide insights into the current states of their respective manufacturing industries. Based on the projected data, we expect a potential weakening of their currencies, given that the manufacturing sector has not shown signs of expansion.

Flash Services PMI for Germany, the UK, and the US (23 August 2023)

Germany’s services PMI declined from 54.1 in June 2023 to 52.3 in July 2023, indicating the slowest growth in five months. Similarly, the UK’s services PMI declined from 53.7 to 51.5 during this period, making July the third consecutive month of slowing activity across the country’s service sector. Finally, the US’ services PMI also fell from 54.4 to 52.3 during the same period.

Analysts’ predicted services PMIs for August 2023 are as follows: Germany at 51.5, the UK at 53, and the US at 52.

Takeaway: The upcoming release of Services PMI data for Germany, the UK, and the US will provide insights into the current state of their service industries. Based on the projected data, we anticipate a potential strengthening of their respective currencies, considering that the services sector is currently in an expanding phase.

Germany’s Ifo Business Climate Index (25 August 2023)

Germany’s Ifo Business Climate Index fell for the third consecutive month in July 2023, indicating pessimistic expectations for the coming months. The July figure of 87.3 is also the lowest level since November 2022.

The figure for August 2023 will be released on 25 August, with analysts expecting a reading of 86.9.

Takeaway: We are anticipating the release of Germany’s Ifo Business Climate Index, which will provide us with the latest updates on business conditions in the country. Based on the forecasted data, we expect Germany’s currency (Euro), to weaken if the business index is lower.

Jackson Hole Economic Symposium (25–27 August 2023)

The Jackson Hole Economic Symposium is an annual symposium that focuses on key economic issues affecting the world.

Its participants include prominent financial figures and leading market players from all around the globe. Proceedings from the symposium might hence have an impact on market sentiment and movements.

Takeaway: Upcoming speeches from central bank leaders around the world are anticipated. The market’s primary attention will be on major central banks. On Friday, Jerome Powell is scheduled to deliver a speech, followed by Christine Lagarde from the ECB on Saturday. It is expected that their addresses will centre around economic and monetary policy matters.

Make informed decisions with the most up-to-date and reliable financial data, exclusively provided by vtmarkets.com.