This morning volatility increased within the currency market as Europe and the UK released their latest Purchasing Managers’ Indexes. The US Dollar this morning is again attempting to increase in value after members of the Federal Reserve indicated another rate hike. However, the Dollar has been pushed back by the latest PMI data. Europe, Europe’s largest economy, Germany, and the UK have all released similar PMI data.
Manufacturing data remains lower than expected and below 50.0, which indicates that a contraction is possible. This is specifically negative for inflation, which is currently being pressured by the supply chain. The UK’s Manufacturing PMI read 46.6, the lowest in 4 months and lower than the 48.3 markets expected. German and French Manufacturing PMI read 45.5 and 44.00, the lowest since the COVID-19 outbreak. Services PMI data was higher than expected and above 50.00 for all regions.
However, traders should note that the Dollar is still fighting back, attempting to test the week’s resistance levels. The US Dollar Index is increasing in value, trading at 101.95, a 0.10% increase. The increase is moderate, but traders will continue to monitor throughout the day as more US investors enter the market. Traders also anticipate more volatility as the US releases its PMI data this afternoon.
Investors can see stronger bullish price movement for the Euro when looking at the Pound and the Euro's performance. The EUR/GBP is also increasing in value this morning, gaining 0.31%. One of the best-performing currencies of the morning session is the Yen, which is rising in value against the Euro and Dollar and showing solid gains against the Pound.
Dow Jones - US PMI Data in Focus
The Dow Jones is declining for a fourth consecutive day as US companies release their earnings reports. The Dow Jones is being influenced by the earning reports recently released by Goldman Sachs and even by companies that are not a component of the Dow Jones. For example, AT&T, Tesla, and Netflix. The companies with the strongest influence are UHG, Goldman Sachs, Home Depot, McDonald's, and Microsoft, which all hold a weight of above 5%.
Investors in the Dow Jones today will be concentrating on two elements. The US Purchasing Managers’ Indexes and P&G’s earnings report. Procter and Gamble is scheduled to release their earnings report before the US market opens. The stock has performed generally well over the past 30 days, possibly due to the stock’s defensive status. Wall Street analysts expect the company to release an Earnings Per Share of $1.32 and Revenue of $19.30 Billion. If the report shows higher figures, the stock price may soar and also support the Dow Jones.
In addition to the ongoing earnings reports, which will continue to influence the stock market over the next three weeks, investors are also focusing on other influencing elements. Investors have been analyzing the monetary policy, which may change next month, and investors are questioning if the rate will rise again. Last night, the Federal Open Market Committee members confirmed they would again be hiking next month, putting more pressure on the stock market. Nonetheless, most economists believe this will be the last hike until the Fed further analyses the effects on the economy over the summer months. However, higher interest rates and a more expensive Dollar can negatively affect the stock market.
In addition, Dow Jones also negatively reacted to yesterday’s unemployment claims, which increased for a fifth consecutive week. However, participants should note that the unemployment claims remain far lower than the average before a recession. However, investors will continue to monitor if the claims rise to more worrying figures. Lastly, the Services and Manufacturing data are expected to decline slightly. The data can also influence the price of the Dow Jones.
Summary:
- The UK’s Manufacturing PMI read 46.6, the lowest in 4 months and lower than the 48.3 markets expected.
- Services PMI data for the UK and Europe was higher than expected and above 50.00 for all regions.
- The Dow Jones is declining for a fourth consecutive day as US companies release their earnings reports.
- Procter & Gamble is scheduled to release their earnings report before the US market opens. The release is likely to influence the pricing of the Dow Jones.
- The Federal Open Market Committee confirms interest rates will continue to rise.
