The dollar index (DXY00) on Friday rose by +0.50% due to increased liquidity demand sparked by the weak U.S. stock market. In addition, EUR/USD (^EURUSD) fell by -0.65% as the Eurozone PMI reports were weaker than the U.S. PMI report, which sparked euro selling. USD/JPY (^USDJPY) rose by +0.47%.
Friday’s preliminary-June S&P U.S. PMI fell by -2.1 points to a 6-month low of 46.3, weaker than expectations for a +0.1 point increase to 48.5. The services PMI fell -0.8 points to a 2-month low of 54.1, slightly better than expectations for a -0.9 point drop to 54.0. The composite PMI fell by -1.3 points to a 3-month low of 53.0, which was weaker than expectations for a -0.8 point drop to 53.5.
Friday’s Eurozone PMI report suggested that the Eurozone might be in for another quarter of negative growth in Q2 after Eurozone GDP fell slightly by -0.1% q/q in both Q4-2022 and Q1-2023, meeting the short-hand definition of a recession. The consensus is that Eurozone GDP will show a slight increase of +0.1% q/q in Q2, but today’s weak PMI report called that forecast into question.
The preliminary-June S&P Eurozone composite PMI fell by -2.5 points to a 5-month low of 50.3, much weaker than market expectations of 52.5. The preliminary-June S&P Eurozone manufacturing PMI fell by -1.2 points to a very weak 43.6, which was weaker than expectations of unchanged at 44.8. The preliminary-June S&P Eurozone services PMI fell by -2.7 points to 52.4, weaker than expectations for a -0.6 point drop to 54.5. The preliminary-June S&P German composite PMI fell by -3.1 points to 50.8, while the French composite PMI fell by -3.9 points to 47.3.
On the more positive side, Eurozone input prices fell to the lowest level since December 2020, and selling prices for goods and services fell to the lowest level since March 2021.
Atlanta Fed President Bostic Friday delivered dovish comments for the second time this week, saying that he thinks rates should remain unchanged through year-end and long into next year.
August gold (GCQ23) Friday closed up +5.90 (+0.31%), while July silver (SIN23) closed -0.113 (-0.50%). Gold prices were boosted Friday by the sharp decline in global bond yields and safe-haven demand with the sell-off in stocks. Gold was able to shake off the +0.5% rally in the dollar index. However, silver showed its fourth consecutive daily loss on concern about the outlook for industrial metals demand after Friday’s weak U.S. and Eurozone manufacturing PMI reports.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
