{"id":154772,"date":"2019-09-04T11:00:42","date_gmt":"2019-09-04T15:00:42","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=154772"},"modified":"2019-09-04T08:49:10","modified_gmt":"2019-09-04T12:49:10","slug":"weak-manufacturing-pmi-stimulates-recession-fears","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2019\/09\/weak-manufacturing-pmi-stimulates-recession-fears\/","title":{"rendered":"Weak Manufacturing PMI Stimulates Recession Fears"},"content":{"rendered":"
September 4, 2019<\/div>
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By <\/strong>Orbex<\/strong><\/a><\/p>\n

Dollar Flows A Key Market Driver<\/strong><\/h2>\n

Yesterday\u2019s Manufacturing PMI figures seem to have an enduring influence on today\u2019s session, at least up to now. The decline to 3-year contractionary lows\u00a0rejuvenated investors\u2019 fears of an emerging recession.<\/strong>New orders dropped to a 7-year low.<\/p>\n

Despite Services PMI represent nearly 80% of economic activity, market participants remain cautious as services could stagnate should manufacturing remain in a free-fall.<\/p>\n

The\u00a0downside on the US Index, however, could find a stop at 98.40.\u00a0<\/strong>Traders are patiently waiting for Friday\u2019s NonFarm payroll numbers.<\/p>\n

Euro Up, Undeterred By Contractionarry Retail Sales<\/strong><\/h2>\n

An array of Euro-wide PMIs in the earlier session supported Euro\u2019s move to the upside.\u00a0Euro was and still is, influenced by a weaker dollar<\/strong>. With the upbeat figures, EURUSD was able to cross above the 1.10 psychological hurdle.<\/p>\n

Note that the flows remained positive despite the Euro Area Retail Sales numbers came out at -0.6% (exp -0.1% vs prv 1.2%). EURUSD traders now seem to be\u00a0eyeing the 1.1025 level.<\/strong><\/p>

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Poor UK Services PMI Saves Bulls A Breath<\/strong><\/h2>\n

UK\u2019s Markit Services PMI was unable to stop the bulls. Although the decline was minimum compared to the forecast (50.6 vs 50.7), the data set was indeed worst that the previous month\u2019s figures at 51.4. Such numbers indicate that\u00a0GBPUSD is also influenced by negative USD flows.<\/strong>\u00a0PMI figures are nearing the 50 contraction mark.<\/p>\n

Regardless, the pair is bullishly biased and\u00a0could reach the 1.22<\/strong>\u00a0level before any meaningful pullback is seen.<\/p>\n

Commodity Pairs Soar Too, Despite Disappointing Data<\/strong><\/h2>\n

Loonie, Kiwi and Loonie did report weaker data than the European and UK economies, however, they remain strong as\u00a0risk flows shift.<\/strong><\/p>\n

Australia\u2019s Services PMI fell to a deeper contractionary level at 49.1\u00a0and its GDP remained flat at 0.5%. <\/a>Despite a 1.1% forecast, New Zealand\u2019s Commodity Price Index came out 30 basis points worse than expected.\u00a0Canada\u2019s PMI also crossed into recessionary levels at 49.1,\u00a0<\/strong>from a 51.4 estimate.<\/p>\n

With recession fears rising and the dollar being driven down, AUDUSD traders eye the 68c level. Kiwi eyes 64c., and USDCAD is looking towards the 1.33 support.<\/p>\n

Safe Havens Under Pressure<\/strong><\/h2>\n

While\u00a0risk assets become currencies of choice,<\/strong>\u00a0gold, yen and the Swiss franc weaken from a safe-haven perspective.<\/p>\n

Gold is pulling back after forming a\u00a0double top at 1510\/oz<\/strong>\u00a0yesterday. USDJPY seems to be heading back up at yesterday\u2019s high at 106.40. Finally, USDCHF which although is affected by the shift in sentiment indeed, it trades lower contrary to gold and yen. This is likely amid optimistic GDP expectations. These will be released tomorrow during the European session.<\/p>\n

Equities Break Tandem With Dollar<\/strong><\/h2>\n

Despite the dollar and indices\u00a0have been moving in tandem<\/strong>\u00a0over the past few sessions on the back of trade war narratives, the relationship just broke. This is owned to a shift in sentiment. This most likely has investors thinking that now, and following the PMI drama yesterday, the\u00a0Fed could be forced to cut rates <\/strong><\/a>in the next FOMC meeting on September 18th.<\/p>\n

By <\/strong>Orbex<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By Orbex Dollar Flows A Key Market Driver Yesterday\u2019s Manufacturing PMI figures seem to have an enduring influence on today\u2019s session, at least up to now. The decline to 3-year contractionary lows\u00a0rejuvenated investors\u2019 fears of an emerging recession.New orders dropped to a 7-year low. Despite Services PMI represent nearly 80% of economic activity, market participants […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-154772","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/154772","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=154772"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/154772\/revisions"}],"predecessor-version":[{"id":154781,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/154772\/revisions\/154781"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=154772"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=154772"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=154772"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}