Tomorrow could be the most important day of the week in terms of data releases. Not only is there the FOMC minutes, but most major countries also report previous November PMIs. Given that this is preliminary data, it is the most recent information that traders have access to. Therefore, if it does not match expectations, it can change the entire dynamics of the market.
In general, better-than-expected PMIs translate into riskier attitudes. Disappointing PMIs may renew interest in safe havens. With the market on somewhat uncertain ground lately, smaller moves in the data have provided larger swings in sentiment. The consensus is that the world is headed for a slowdown, so there is more chance that the markets could get an optimistic boost, as PMIs are widely expected to slide further into contraction.
Here are the main points to observe:
Australian Manufacturing PMI is expected to remain in expansion, although slipping slightly to 52.2 of 52.7 prior. Services are expected to confirm that they contracted at 48.6, down from 49.3 previously. The lingering Covid situation in China combined with passenger traffic at major airports is limiting the expected boost that the economy usually gets in summer.
As the first of the big European countries to report, it will probably set the tone for the common economy. It could also set the trajectory for the Euro for the rest of the week, as trading volumes are expected to be lower due to holidays in the US. French Manufacturing PMI is expected to slip further into contraction at 47.0 compared to 47.2 previous. Services PMI is expected to hold expansion at 50.6 compared to 51.7 previous.
Europe’s largest economy is expected to buck the trend somewhat and remain broadly stable amid a contraction. Services PMI is expected down to 46.4 from 46.5 previously. Meanwhile Manufacturing PMI is expected to rise by the same amount to 45.2 of 45.1 prior.
The UK economy has already been officially declared in recession, and PMI is naturally expected to fall further into contraction. Industry is expected to do the worst but not as bad as Germany. Manufacturing PMI is expected at 45.6 compared to 46.2 in October. Services PMI is expected to fall by the same amount to 48.0 from 48.8 previously.
the united states
In the world’s largest economy, the situation is expected to have a major change. Manufacturing expected to cross the 50 from expansion to contraction by the bare minimum is likely to have more of a psychological impact as both PMIs turn to pessimism. Manufacturing PMI is expected to come in at 49.9 compared to 50.4 previous. Services PMI is expected to tick one decimal further into contraction at 47.7 from 47.6 previous.
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