Summary:

  • US services PMI comes in well below expectations while manufacturing one slightly beats the consensus
  • US500 losses more than 1% at the beginning of trading awaiting the Trump’s announcement
  • Make or break – a major support line being tested on the USDJPY

European PMIs disappointed across the board, however, readings coming from the US proved to be a bit better on balance the net outcome seems to be USD negative anyway. Major indices on Wall Street are trading well below the levels of their last close while the greenback is going nowhere as investors are awaiting the Trump’s announcement on tariffs against China set to be unveiled this afternoon.

link do file download linkUS services PMI disappoints sending a warning signal ahead of the ISM release. Source: Macrobond, XTB Research

The freshly released data showed that services PMI slid in March to 54.1 from 55.9 seen in the prior month missing the consensus at 56. In turn, the manufacturing sector proved to be much more resilient as PMI increased to 55.7 from 55.3 slightly beating expectations at 55.5. Better than expected moods among manufacturing companies may have stemmed from steel and aluminium tariffs favouring both industries. On the flip side, companies using semi-finished goods, where aluminium or steel are necessary to produce, could have witnessed some deterioration. Overall, the net effect turned out to be positive for the manufacturing sector, however, we cannot say the same about the services. Of course, the jury is still out nevertheless this month dip deserves more attention going forward as it could herald some difficulties among service providers accounting for roughly 80% of the US economy.

Meanwhile, the US stock market has begun Thursday trading with noticeable losses taking cue from their European counterparts. After one and a half hour of trading the US500 is losing 0.9% while its major peers such as US100 or US30 are losing even more. The greenback seems to play down PMIs as it’s treading water (we mean the Bloomberg index) albeit the USDJPY remains at a danger zone.

link do file download linkThe USDJPY is testing its crucial support line at around 105.25, and if broken it could lead to a broader sell-off. Do notice that the latest sequence has been clearly bearish therefore buyers may struggle if they want to take control anew. Source: xStation5