Summary:
- UK manufacturing PMI dives further into contraction area in June
- US manufacturing ISM beats estimates but still falls to the lowest level since Q3 2016
- GBPUSD struggles to break below the 50% Fibo level of the latest upward impulse
Markets are all about the US-China trade truce on Monday. However, one should not forget about a streak of the manufacturing survey data that was released on the first day of the week. While many readings were revisions of the initial estimates, some - like for example UK manufacturing PMI and the US ISM - were first releases. The UK data showed a drop from 49.4 pts in May to 48 pts in June while market expected a slight uptick to 49.5 pts. The index reached the lowest level since February 2013 while the New Orders subindex saw a decline from 48.6 pts to 46.3 pts, the lowest level since July 2012.
Start investing today or test a free demo
Open account Try demo Download mobile app Download mobile app
The US manufacturing ISM declined to the lowest level since Q3 2016. Source: Macrobond, XTB Research
Survey gauges from the euro area were barely changed against the preliminary readings while the US manufacturing PMI moved from 50.1 pts to 50.6 pts. However, when it comes to the US, the attention is paid mostly to the ISM indices. The manufacturing ISM index was released at 3:00 pm BST and it actually turned out to be a positive surprise. Indeed, the headline gauge dipped from 52.1 pts to 51.7 pts but the market expected a decline towards the 51 pts. An increase of the employment subindex from 53.7 pts to 54.5 pts bodes well ahead of Friday's NFP report release. New orders subindex may be a source of concern. Namely, the index plummeted from 52.7 pts to 50 pts while market consensus pointed at a slight drop to 52.5 pts. In turn, this subindex found itself at the lowest level since end-2015. The overall picture from the release is fairly positive given poor performance of the PMIs from the other parts of the world. Nevertheless, one should not be distracted from the fact that the headline ISM manufacturing gauge dipped to the lowest level since Q3 2016.
Following two failed attempts, GBPUSD finally managed to break below the 38.2% Fibo level (1.2665) of the upward move started in mid-June. The pair quickly reached the 50% Fibo level (1.2635) but struggled to dip below. The aforementioned 50% Fibo level along with the 1.2620 handle mark limits of the nearest support zone. A break lower would pave the way towards the swing level at 1.2510. However, lower wicks of the past three candlesticks on the H4 interval hint that bulls are looming near the 50% Fibo level and in turn there is a chance that the current trading range (1.2620-1.2750) remains intact. Source: xStation5
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.
