- US labour market decent but activity data nosedive
- European inflation adds pressure on the ECB
- Weak prints prevail in Asia
US – economy closing down on global trends
Last week we considered whether relatively upbeat inflation numbers from the US were the sign of economic strength or another problem for the Fed. More arguments points to the former. Yes, the NFP was mixed with unemployment rate falling to a fresh 50-year low of 3.5%. Wage growth was weak but it needs to be confirmed if that’s a sign of any general labour market weakening. However, the ISM indices were outright awful: manufacturing dropped to 47.8 points and non-manufacturing was at a 3-year low of 52.6 pts. In general while global growth kept decelerating, the US has lost any edge it had in business surveys. That’s not a promising sign for the US dollar as the Fed will be under pressure to deliver more rate cuts.
Start investing today or test a free demo
Open account Try demo Download mobile app Download mobile app
The US economy has seen a major slowdown lately – that’s a problem for the USD and also not a good sign for global growth. Source: Macrobond, XTB Research
Key economic event this week: FOMC minutes (Wednesday, 7:00pm BST)
Europe – PMI weakness spreads out
The last week did not start well in Europe with inflation prints below expectations for Germany, Spain and Italy. We already knew the EMU-level PMIs for September were very weak so the focus was on minor countries. Heavy PMI declines in Sweden, Norway (manufacturing) and UK (non-manufacturing) showed that if anything, the slowdown becomes more entrenched. This week started with Sentix plunging to -16.8 points (from -11 in September) – that’s the lowest in 6 years. Since we consider the ECB stimulus largely ineffective, Europe really needs to hope that external conditions improve and that’s not the case – at least for now.
Despite poor US data, EURUSD remains within a steep downward channel. Source: xStation5
Key economic event this week: ECB minutes (Thursday,12:30pm BST)
Asia – downside surprises dominate
After a package of somewhat upbeat PMIs from China ahead of the week-long holiday there was a hope that Asia could be bottoming out. However, weak report from across the continent were mostly disappointing. Although both Australian PMIs improved, similar reports from Korea and India deteriorated (India services PMI saw a massive drop from 52.4 to 48.7) and Japanese consumer confidence sunk to the lowest since 2011. This might suggest that the Asian economic engines are still losing power and a bump in the Chinese data could well be due to some additional activity ahead of the holidays.
KOSP200 has reversed lower after a strong recovery in September – will downward trend continue? Source: xStation5
Key economic event this week: Chinese services PMI (Tuesday, 2:45am BST)
This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.
