Intraday Market Thoughts

Will US ISM Continue to Save the Day?

by Patrik Urban
Jul 2, 2012 13:28

Now that every major nations PMI is at or below 50, all eyes are on the US manufacturing ISM. ESM bond buying in question; UK manufacturing PMI improved; German and Eurozone manufacturing PMI revised higher; Eurozone unemployment rate rose. Market turns to ISM manufacturing. Registration details on Ashrafs webinar this evening are found below. Fridays Premium Insights on EURUSD & GBPUSD are in the final paragraph.

Markets were consolidating large Friday moves with a slight bias toward USD weakness. A few hours after the London session started, the greenback regained lost ground on reports that Finland and Netherlands will block ESM bond buying in secondary markets which was one of the novelties that was agreed upon during the summit last week. The USD is little changed and European equities are gaining about 0.75%.

UK manufacturing sector contracted again in June but the pace decelerated as PMI improved to 48.6 from previous 45.9. Incoming new business declined for the third month in a row despite cost pressures that fell sharply as input prices dropped at the fastest pace in three years. Employment level also declined. GBPUSD trades little changed around 1.5680.

German final manufacturing PMI for June was revised higher to 45 from initial estimate of 44.7 while the Eurozone's counterpart was revised to 45.1 from 44.8. However, the improvement was negated by Eurozone unemployment rate that ticked higher in May to 11.1%f from previous 11.0% which is new euro era high. Euro is little changed against the USD around 1.2630 but is weaker against the GBP as it trades around 0.8055.

In other news, Swiss data bested expectations today as retail sales soared 6.2% in May from previous 0.2% y/y and June SVME PMI improved to 48.1 from 45.4. Spanish manufacturing PMI worsened to 41.1 from 42.0 and Italian PMI declined to 44.6 from 44.8. Spanish and Italian 10 year yields initially declined but started to recover again. Currently they are around 6.28% and 5.74%.

Markets await ISM manufacturing that is due at 10:00 am ET and is expected to decline in June to 52.1 from previous 53.5.US manuf ISM is the only G10 ISM remaining in expansion territory. Here is a CHART on how soon US ISMs will fall below 50 following the Philly Fed, Chicago PMI & NY Feds Empire survey

The volatility could heighten also at 1:15 pm when San Francisco FED president and the FOMC member John Williams participates in a panel discussion on monetary policy.

ASHRAFS WEBINAR THIS EVENING is part of a TRIPLE WEBINAR, with Fari Hamzei (stock indices) and George Cavaligos (Bonds & Bunds). Ashraf will go cover is latest macro-technicals and the implications on FX, gold, equity indices and gold Click here:

Fridays Premium Insights are in progress for EURUSD, USDJPY, GBPUSD,USDCAD, AUDUSD and gold, while GBPJPY has been stopped out at


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