The EU and UK release largely negative Purchasing Managers’ Indexes, which has sent both currencies declining. In addition to this, PMI reports will also influence popular indices such as the NASDAQ. As the Pound and the Euro decline, the US Dollar Index has risen 0.22% during this morning’s trading sessions. The US Dollar Index, as a result, rose to a new weekly high before retracing. US bullish traders will now be turning their attention to further breakouts as well as this afternoon’s US PMI data. The best-performing currency over the past 24 hours has been the US Dollar, while the worst has been the Pound, Yen and Swiss Franc. The dovish decisions of the regional central banks have triggered the poor performance of these three currencies.
The Bank of England and the Swiss National Bank unexpectedly kept interest rates unchanged. The Bank of Japan kept interest rates intact but unexpectedly gave a relatively dovish forward guidance. The pair depreciated most over the past month is the GBP/USD, which has declined 3.80%. The GBP/USD is trading at the lowest price since March 2023.
The French Purchasing Managers’ Index was the most damaging for the Euro, as both Manufacturing and Service surveys read lower than expectations. The lowest French PMI was the Manufacturing PMI, which fell from 46.0 to 43.6, the lowest over three years. The German PMI was slightly more positive, as the index rose to the stagnation zone (49.8). However, the Manufacturing PMI continues to remain below 40.0. For the UK, the economic data continues to point to weakness. The UK Monthly Retail Sales read 0.4% instead of the expected 0.5%. Therefore, over the past six months, Retail Sales figures are down 1% and 0.3% in 2023.
NASDAQ
The Asian stock market is on the rise this morning and European equities are witnessing a slight rise. Here, the stock market appetite is slightly better than the past two trading days. The past two trading days have shown a clear “risk-off” appetite, but the NASDAQ and other US indices are slightly higher in the future market. Some positive factors within the market, such as the Bank of England, Swiss National Bank and Bank of Japan, look very dovish. In addition, PMI data indicates that a pause is likely to be the new reality for 2023 as long as inflation does not rise again.
However, investors should note the NASDAQ has not yet received a signal from technical analysis indicating an upward impulse wave. In addition, harmful components remain, such as the Dollar and Bond yields. When looking at technical analysis and the day’s upward price movement, indicators are signalling a retracement. The asset is still forming lower lows and lower highs. In addition, the price remained below the VWAP throughout the whole day on Thursday. We can see here we have indications the price is likely to fall, but at the same time, the price has fallen for three consecutive days, and traders may purchase the discount temporarily. If the price increases above $14,792 or $14,843, signals to buy back to $15,071 may form. However, this will be relative if the price continues to have higher highs after that.
The price of US bond yields has now risen to 4.48%, the highest this year. This week alone, the 10-year Bond Yields rose from 4.3230% to 4.5070%, piling the pressure. The higher the bond yields and the US Dollar go, the more pressure there will be on the stock market. This afternoon’s US Services and Manufacturing PMI will influence the NASDAQ’s price movement. Analysts expect both surveys to rise by a few points slightly.
A concern for shareholders and ETF holders is that, out of the 100 stocks, only size stocks rose in value yesterday. Kraft Heinz saw the highest increase, rising 1.38%. The company which saw the most significant decline was Atlassian, declining 5.41%, but the most significant decline was Amazon, which fell 4.41% and holds a weight of 5.54%. Amazon is the third most influential company behind Microsoft and Apple. Apple, which is the most influential stock, declined by 0.89%.
According to the new forecasts of the regulator, the US GDP may increase by 2.1% instead of 1.0% by the end of 2023, and in 2024 it will be 1.5% instead of 1.1% earlier. The unemployment rate will likely fall to 3.8% in the next few months, and by 2024 might reach 4.1%. The inflation forecast for the end of the year has been adjusted and now stands at 3.3%, while further decline is expected to be 2.5% in 2024 and 2.2% in 2025. The economic outlook remains steady and resilient, but a primary factor for the NASDAQ will be bond yields and monetary policy pricing.
Summary:
- This morning’s French data was the most damaging for the Euro. Both Manufacturing and Service surveys read lower than expected.
- The best-performing currency over the past 24 hours has been the US Dollar. The worst has been the Pound, Yen and Swiss Franc.
- The pair depreciated most over the past month is the GBP/USD, which has declined 3.80%. The GBP/USD is trading at the lowest price since March 2023.
- US Bond Yields are applying significant pressure on the US stock market despite global banks not raising rates.
- The most significant decline within the NASDAQ was Amazon, which fell 4.41% and holds a weight of 5.54%. Amazon is the third most influential company behind Microsoft and Apple. Apple, which is the most influential stock, declined by 0.89%.
- Longer-term signals point towards a downward trend for the NASDAQ, but if the price increases above $14,792 or $14,843, signals to buy back to $15,071 may form.
