Article / 22 July 2016 at 7:00 GMT

Morning Markets: All eyes on the PMIs Team / Saxo Bank



  • France: Flash PMI (0700 GMT)
  • Germany: Flash PMI (0730 GMT)
  • Eurozone: Flash PMI (0800 GMT)
  • Canada: CPI (1230 GMT)
  • US: Flash manufacturing PMI (1345 GMT)

There were no supportive noises from central banks overnight, which fed into the across-the-board falls seen in today’s trading in Asia. Still, the selling was relatively limited, although the Nikkei was off 1.1%, weighed down by a stronger yen. The yen’s steepest rally in a month was triggered following the Bank of Japan governor’s comments around there being no need for helicopter money. 

There was plenty of action in the US with Donald Trump formally accepting the Republican’s presidential nomination and Rupert Murdoch announcing he’ll step in as Fox News chief following Roger Ailes immediate step-down. But on the markets, the forward momentum took a break following misses against expectations in leading stocks such as Intel and American Express. 

Most of the chat in the US was around the Federal Reserve and its rate intentions, especially as the US jobless claims and housing numbers came in so strongly yesterday: claims were at a three-month low and home sales were well above expectations. 

In Europe, the European Central Bank held off taking any action in yesterday’s meeting: Mario Draghi, along with his colleagues remain cautious, and stressed it is still too early to determine what the economic fallout from Brexit will be. 

However, today’s July flash purchasing managers' indices will give the first proper glimpse as to whether Europe's real economy will be able to tolerate the uncertainty caused by the UK's Brexit referendum. Juhani Huopainen says while sharp falls are expected for UK data, the rest of Europe is expected to be only modestly hit.    

Market signals

Asian session

  • Roger Ailes resigned as Fox News chief; Rupert Murdoch will assume the role
  • Donald Trump formally accepted the Republican presidential nomination
  • Japan's July flash manufacturing PMI came in at 49, compared with 48.1 in June
  • Shares were lower across the board in Asia on global leads
  • Pokemon Go debuted in Japan, sending Nintendo shares higher
  • North Korea’s economy last year is estimated to have contracted the most since 2007 
  • Australian miners were among the few stocks to shine on the ASX
  • The ASX200 closed down 0.3% to 5498 but up 1.3% on the week

Forex ahead

  • The yen surged higher after the BoJ chief ruled out any helicopter money moves
  • The US dollar retreated against the yen; it was worth just ¥105.7655 at 0058 GMT
  • The Australian dollar lost ground against the US dollar; it was worth 0.7499 at 0057 GMT

From the Floor

Rallying action. ”We see the kiwi stemming its declines this morning […] we will be looking to sell the kiwi on rallies,” says Liu.

Overhaul in the offing. ”The ECB was definitely a sleeper,” Hardy says. ”It’s pretty clear that they are looking at a major overhaul at the September meeting.”

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

G20 finance ministers and central bank governors meeting in China this weekend may come up with a coordinated fiscal response to the bleak world outlook, says Juhani Huopainen.

Aussie upside
While the ASX200 fell slightly in early trade, AUDUSD was showing upside potential as copper and iron ore continue to show strength, write the team at Saxo Capital Markets (Australia).

September stakes
The European Central Bank meeting on Thursday delivered little, but it raised the stakes for action by the bank in September, says Saxo's John J Hardy.

ECB Governing council

The ECB's governing council meeting on Thursday delivered only slim pickings, but it raised 
the chances of action in September. Photo: Screen grab from ECB webcast 

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