China's factory activity shrinks for 5th month
China's factory activity in August shrank for a fifth straight month, while non-manufacturing activity hit another low for the year
Dollar stages recovery after overnight selloff, bringing respite to Asian markets
Eurozone's CPI flash and US PCE inflation data in focus
Gold surpasses $1,940/oz on weaker US data, signaling doubts about further Fed rate hikes
China's NBS Manufacturing PMI beats forecasts at 49.7 in August, still in shrink zone
Anticipation builds for US PCE YoY increase to 3.3% and potential rise in unemployment claims
Asian markets exhibited a momentary respite in today's trading session, as the US Dollar rebounded from a significant selloff witnessed overnight. The greenback appears to have discovered a tentative foothold, diverting market attention towards the imminent release of pivotal economic data—specifically, the Eurozone's Consumer Price Index (CPI) flash report and the United States' Personal Consumption Expenditures (PCE) inflation figures—scheduled for later in the day.
The Eurozone's inflation report, in particular, assumes a pronounced importance, as it holds the potential to intricately influence the European Central Bank's (ECB) forthcoming decision on the trajectory of interest rates. Market observers are keenly attuned to the outcome of this report, as it could potentially determine whether the ECB opts for a further interest rate hike or decides to momentarily halt its tightening measures during the September meeting.
Gold's surge amidst weak US data
Noteworthy developments in the commodities arena reveal that gold has solidified its position above the $1,940 per ounce threshold on Thursday. This surge is rooted in underwhelming US economic data, which has subsequently fueled speculation concerning the cessation of interest rate hikes by the Federal Reserve. The confluence of a weaker dollar and diminished US Treasury yields has propelled the precious metal to attain one-month highs.
Freshly unveiled economic releases underscore that the world's largest economy fell short of projections for Q2 2023 growth, with private job expansion decelerating to its lowest point in five months. Conversely, while German inflation exhibited a marginal slowdown, Spain's inflationary pressures surged, buttressing the case for heightened policy tightening from the ECB.
China's manufacturing activity shrinks in August
A spotlight on China reveals that the official National Bureau of Statistics (NBS) Manufacturing Purchasing Managers' Index (PMI) ascended to 49.7 in August 2023 from the previous month's reading of 49.3. This unexpected uptick, surpassing market expectations of 49.4, signifies the mildest contraction in factory activity since the expansion observed in March. Against a backdrop of multifarious interventions by Beijing to invigorate a faltering economic recovery, this unforeseen resurgence in the manufacturing index signifies nascent signs of stabilization. However, the property sector's persistent malaise and sluggish demand continue to exert a constraining influence on a more comprehensive economic rebound.
Anticipation for US Data
Looking ahead, market participants are in eager anticipation of the US PCE price index YoY, which is poised to display a marginal uptick from 3% to 3.3%. Simultaneously, projections for US unemployment claims hint at a modest rise from 230,000 to 236,000.