US dollar retreats after weak US data

IIt’s another day of bad economic data for European markets, with the latest flash manufacturing PMI numbers falling into contractionary territory for Germany, France and the UK.

Europe

While economic data was lackluster, market reaction was slightly more ambivalent and a bit mixed, with the DAX and CAC40 treading water, opening just above three-week lows.

The FTSE100 is underperforming and looks set to close lower, although today’s weakness has more to do with the fact that it has managed to outperform its peers over the past week and he’s playing catch-up so to speak.

The rebound in the price of oil is helping to support the energy sector with Shell and BP rising, while copper prices at six-week highs give Antofagasta and Anglo American a boost.

LV Group shares are higher after the UK government said it would take no action on Altice Group’s 18% stake in the company. This move by the government was viewed as a positive move by investors, removing some of the uncertainty regarding future government intervention. What it doesn’t do is prevent the UK government from stepping in again if Altice seeks to increase its stake further, and perhaps it helps explain the relatively modest share price reaction. .

Petroleum service provider John Wood Group Shares slid to their lowest levels since March 2020 after the company forecast first-half revenue of $2.56 billion, below consensus estimates of $2.57 billion. The company was more optimistic in the second half of the year, saying it expected to see annual revenue of between $5.2 billion and $5.5 billion and annual EBITDA of $370 to $400. millions of dollars.

WE

After two days of declines and the biggest one-day decline since June, US markets opened cautiously before recovering slightly following some disappointing economic reports that showed the US economy battling the effects of the price increase.

A bigger-than-expected contraction in the services PMI in July was followed by a sharp -12.6% drop in new home sales, which in turn caused some weakness in the US dollar and a rebound technology stocks.

When Zoom reported in the first quarter that their estimates for the second quarter called for revenue of $1.12 billion and earnings of C0.90 a share, while raising their full-year revenue forecast to $4.55 billion. of dollars. Investors were therefore disappointed to see revenue fall to $1.1 billion, even as earnings hit C$0.92 per share. The company also downgraded its outlook for the third quarter as well as the rest of the year. For the third quarter, revenue is expected to remain flat at $1.1 billion, while earnings are expected to fall to CA$0.82. For the full year, Zoom says it sees full-year revenue down to $4.39 billion to $4.4 billion and profit to $3.66 to $3.69, down from $3.7 to $3.77. Zoom blamed a slowdown in its online business as fewer people took advantage of its online service, and amid increased competition from Microsoft and Cisco Systems.

Twitter The shares also opened sharply lower on reports that its chief security officer accused it of glaring flaws in its safeguards when it comes to its users. This allegation places Twitter in potential violation of its 2011 settlement with the FTC over past safeguard issues regarding its user base.

Effects

The US Dollar took a small break today, even as the Euro slipped to a new 20-year low, falling from the 0.9900 level, in what could be the start of a buying squeeze. US dollar longs.

The pause in the US dollar’s rise this afternoon was caused by a combination of a poor services PMI which saw economic activity fall to 44.1 in August from 47.3 in July, and sales of new homes which fell 12.6% in July. The PMI numbers were even weaker than what we saw in Europe earlier in the day, and caused some selling in the US Dollars, pushing the Euro back above parity.

The pound also continued to struggle, slipping to 1.1718 before also rebounding after weaker than expected US services PMI and new home sales figures. On the positive side, there was also growing evidence that cost pressures were beginning to ease, although uncertainty remains as to whether this is due to demand destruction or simply an easing. prices.

Goods

crude oil price recovered from a three-day low yesterday after comments from Saudi Arabia that they may consider cutting production due to concerns over the recent sharp drop in prices. Given concerns about weak demand and the inability of prices to recover, some OPEC members may have begun to worry about further price weakness. These worries seem overblown given currently low inventory levels, which should help keep prices bottoming.

Today’s weaker-than-expected U.S. economic data helped pull gold prices higher to three-week lows, as well as see U.S. short-term yields pull back from to the heights of yesterday.

Volatility

Recession fears after a sharp rise in German producer prices have rattled European manufacturers, with EU automakers clearly standing out here. CMC’s proprietary basket of stocks in the sector came under pressure ahead of the weekend break and that continued on Monday as well. Daily basket volume rose to 50.09% from 40.37% for the month, with the potential for instruments like this to continue to react clearly to any news affecting supply or demand.

Following this, Palladium’s underlying spot contract collapsed amid fears that demand for the metal could be hurt by any slowdown in car sales. Prices remain off the lows seen earlier in the year, but should consumer discretionary spending be constrained, there is a real risk that demand will take a further hit. Daily theft came in at 73.57%, down from 50.33% for the month.

The Swedish Krona continues to lose ground against the greenback, with the dollar posting another day of gains yesterday. While this is partly due to the strength of the USD, the state of the local real estate market is also a cause for concern, and the bleak prospects for domestic growth also weigh heavily. The daily theft on USD/SEK was 14.67% versus 12.7% for the month.

Finally, activity in cryptos has cooled somewhat, at least for bitcoin, but price action has remained high on EOS. The coin continued its upward movement, reaching levels not seen since early May. The daily flight printed 161% against 89% on the month.

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