DXY is up and away as EUR collapses:
AUD was smashed:
All commodities too. Hope you’re enjoying Goldman’s buy recommendation:
EMs are at the cliff:
Treasury yields are on the march:
And stocks are going south:
Westpac has the wrap:
Event Wrap
The US ISM manufacturing survey was stronger than expected at 52.8 (est. 51.9, prior 52.8). Among the detail, new orders rose to 53.1 from 48.0, export orders fell to 49.4 from 52.6, employment rose to 54.2 from 49.9, and prices paid rose to 52.5 from 60.0. Weekly initial jobless claims fell to 232k (prior 237k) while continuing claims matched estimates at 1.438m. Unit labour costs in Q2 were revised to +10.2% from an initial read of +10.8% and so productivity was less negative at -4.1% (initial -4.6%).
The Atlanta Fed’s GDPNow model prediction of Q3 growth rose sharply to 2.6% after the ISM data, from 1.6%.
Eurozone manufacturing PMI slipped to 49.6 (flash 49.7) due to a downwards revision to Germany’s PMI to 49.1 from 49.8, which more than offset improvements in other national PMIs, notably a lift in France to 50.6 from the flash 49.0. Recessionary concerns featured and though inflation pressures eased, they remain a key concern.
UK manufacturing PMI was revised higher up to a still weak 47.4 (flash 46.0) with the write-up remaining decidedly pessimistic, as new orders were seen as “plummeting”, despite signs of reduced supply chain disruption.
Event Outlook
NZ: The terms of trade will be strongly impacted by the surge in energy prices over Q2 (Westpac f/c: -3.8%).
US: A materially softer result is anticipated for non-farm payrolls in August given the weakening in other labour market indicators, though risks remain to the upside (market and Westpac f/c: 300k). The unemployment rate should hold at its current level in the near-term (market and Westpac f/c: 3.5%), supporting robust growth in average hourly earnings (market and Westpac f/c: 0.4%). Meanwhile, a softer outcome in factory and durable goods orders for July should mirror weakness in Q2’s investment partials.
That has 75bps from the Fed written all over it. Even as the global economy falls apart. BLS is going to be another grenade.
If it is even decent, conditions for a higher DXY are intact meaning lower commodities and AUD ahead.
It will need to be materially weak to reverse it.
