PREVIOUS TRADING DAY EVENTS – 23 August 2023
Business activity declined heavily for the Eurozone, which was far more than expected in August with a particularly fast slide in Germany.
“The continuing sharp drop in the PMI data will test the ECB’s growth optimism,” said Mark Wall, chief European economist at Deutsche Bank.
“We are expecting the ECB to pause in September, but it is not clear that inflation is where the ECB wants it yet. A pause should not be misinterpreted as the peak.”
The data suggest that business activity in the services industry declined significantly for the first time this year and the contraction in manufacturing output continued, although there were some higher than previously reported figures for factory activity.
Business activity in Germany, Europe’s largest economy, contracted at the fastest pace for more than three years as a deepening downturn in manufacturing output was accompanied by a renewed contraction in services.
In France, the dominant services sector contracted as well.
Britain’s economy, outside the European Union, looks on course to shrink in the third quarter and risks falling into a recession; a result of the high interest rates set by the central bank to counter its huge inflation rate.
“Another weak PMI for the eurozone confirms a sluggish economy with recession as a downside risk. Inflation pressures for services remain stubborn as wage pressures continue to be a concern,” said Bert Colijn at ING. “The latter adds to our expectations that the ECB’s hiking cycle is not over yet.”
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Winners vs Losers
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News Reports Monitor – Previous Trading Day (23 August 2023)
Server Time / Timezone EEST (UTC+03:00)
- Midnight – Night Session (Asian)
No important news announcements, no special scheduled releases
- Morning–Day Session (European and N. American Session)
PMI Releases:
Eurozone PMIs:
France: France suffers as economic activity worsens through the third quarter with a fall in services activity. The index shows 46.7 points against the previous 47.1. Both manufacturing and services figures are in the contraction area. The manufacturing sector showed 46.4, somehow improved indication of business.
Germany: 39.1 points for manufacturing, almost unchanged from the previous figure and a downfall for the services sector that looks almost scary, with the index down to 47.3 for services from 52.3. German business activity fell at the fastest rate since May 2020.
Eurozone: Weak PMIs for the eurozone suggest that the economy is suffering from a great risk of recession. The services PMI figure is the most worrying since the index went below 50, the level that separates contraction from expansion.
During the eurozone’s PMI releases the market reacted heavily as they had a great impact on the EUR pairs. After 10:30 the EURUSD started to fall rapidly more than 50 pips before reversing.
U.K PMIs: Devastating PMIs for both sectors also for the U.K. The U.K. private sector firms suffered a downturn in business activity in August ending a six-month period of expansion. A result of worsened domestic economic conditions and higher borrowing costs. Inflationary pressures continued to moderate in August. UK inflation is still high and more rate hikes could cause greater harm than what is expected for the economy.
During the PMI releases the GBP also suffered depreciation against other currencies. GBP dropped more than 130 pips before reversing.
At 15:30, the retail sales data for Canada were released showing a rise of 0.4% in July beating June’s estimate. Monthly increase was 0.1%, unchanged from the previous month. Core retail sales figure was reported as negative, 0.8% though.
U.S. PMIs: The figures are also grim for the U.S. Business activity which fell for both sectors and growth was reported at its weakest since February as demand for new business in the vast service sector weakened. S&P Global said its flash U.S. Composite PMI index fell to a reading of 50.4 in August from 52 in July, the biggest drop since November 2022.
USD depreciated heavily after the U.S. PMI had been released.
General Verdict:
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FOREX MARKETS MONITOR
EURUSD (23.08.2023) Chart Summary
Server Time / Timezone EEST (UTC+03:00)
Price Movement
The pair was moving with low volatility before the PMI releases and was above the 30-period MA. At 10:30 when the German PMIs were released the pair dropped heavily since the PMIs were grim for the biggest economy in the eurozone. The EUR depreciated heavily and the shock lasted for some time. The pair eventually reversed after reaching an important resistance near 1.08020 but the further push upwards after 16:00 was due to the U.S. PMI releases that also looked bad for the U.S. The release caused USD depreciation causing the pair to move upwards until the resistance near 1.087.
EURGBP (23.08.2023) Chart Summary
Server Time / Timezone EEST (UTC+03:00)
Price Movement
The pair suffered a drop during the eurozone PMI releases and a small shock can be observed at 10:30, however, the PMIs for the U.K. were also devastating and the impact on the GBP was huge. In this chart, it is more clear that the GBP depreciated heavily against the EUR and the pair moved to the upside rapidly; more than 60 pips before retracing to the mean after finding a strong resistance near 0.85660.
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CRYPTO MARKETS MONITOR
BTCUSD (Bitcoin) 4-Day Chart Summary
Server Time / Timezone EEST (UTC+03:00)
Price Movement
The market was ranging recently between 26250 and 25780. No major scheduled news releases took place last week affecting the USD, hence, no major movement was expected. However, this changed yesterday, when the U.S. PMIs were released. The figures were destructive for the U.S. business conditions causing the USD depreciation. This caused bitcoin to move to the upside breaking the resistance near 26250 and moving to the next resistance rapidly at near 26800 before eventually retracing. The path was apparently driven by the USD mainly.
Crypto Sorted by Highest Market Cap:
The past 24 hours’ best performers are Bitcoin, Ethereum, BNB, XRP, Cardano and Solana the top performer with 4.48%.
Source: https://www.investing.com/crypto/currencies
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EQUITY MARKETS MONITOR
NAS100 (NDX) 4-Day Chart Summary
Server Time / Timezone EEST (UTC+03:00)
Price Movement
The upward trend goes on. The index broke significant support yesterday pushing it even higher. Though, this only applies to the specific index. The US30 for example does not follow the same path. In general, the performance of the stock market is kind of mixed at the moment but with an apparent sign of reversal towards the upside.
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COMMODITIES MARKETS MONITOR
USOIL (WTI) 4-Day Chart Summary
Server Time / Timezone EEST (UTC+03:00)
Price Movement
Oil is clearly on a short-term downtrend as it is below the 30-period MA on its way down. It recently broke the support at 79 USD/b and even 78.60 USD/b. A triangle formation is visible but not clear. Will it remain on the downside? Let’s see.
XAUUSD (Gold) 4-Day Chart Summary
Server Time / Timezone EEST (UTC+03:00)
Price Movement
After a long drop that lasted for some time due to USD appreciation, we were expecting that Gold would eventually reverse in price. Yesterday, it broke the significant resistance level near 1905 USD/oz and moved to the upside reaching even more than 1920 USD.
Related Technical Analysis and Idea onTradingView:
https://www.tradingview.com/chart/XAUUSD/251DEAsQ-XAUUSD-Retracement-23-08-2023/
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News Reports Monitor – Today Trading Day (24 Aug 2023)
Server Time / Timezone EEST (UTC+03:00)
- Midnight – Night Session (Asian)
No important news announcements, no special scheduled releases
- Morning–Day Session (European and N. American Session)
Today intraday shocks for USD pairs will probably take place at 15:30 since we have the important figures for the U.S. durable goods together with the unemployment claims figures released.
General Verdict:
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