Waiting for PMIs
21 February 2023
Tuesday is all about PMIs as today, countries like France, Germany, the UK, and the US will present their Purchasing Managers’ Index. The first country to publish the PMI in this round was, in fact, Australia and they did it overnight. Both the Manufacturing and Services PMI rose slightly, compared to the number from the previous month. We already learned the Manufacturing PMI number from Japan as well and it largely disappointed at 47.4, dropping to the lowest level since September 2020. Apart from the PMI, we also have the inflation data from Canada in today’s calendar, where the median CPI is expected to drop to 4.9% from the 5% reported previously.
At night, we also received the RBA meeting minutes. The board agreed that additional rate hikes were likely in the upcoming months; and the cash rate was still lower than in many developed countries. Those are definitely hawkish comments, but the Australian Dollar does not seem bothered by it. Yesterday, the AUD was the strongest one in the pack but today, buyers are giving up. Buy the rumors, sell the fact kind of move?
Yesterday’s trading was not too volatile. American traders were absent due to the Presidents’ Day celebrations. Indices slightly corrected to the downside after a bullish session on Friday. Tuesday also starts with a bearish tone with all the major futures trading in red territory.
On the currency market, we can see a comeback of a stronger dollar, which goes in line with the recent hawkish FED. The stronger dollar is without a doubt hurting the commodities, who are going down at the end of the Asian session. Mid-term sentiment, especially on the oil, is rather negative and there are chances that we shall witness even bigger drops in the near future.