Market movers today
Today, the June manufacturing PMI figures for Norway, Sweden, the euro area (including Spain and Italy), the UK and the US are due out .
The unemployment rate for the euro area in May is also due out today and we estimate it stayed at 9.3%. It is st ill our view that the unemployment rate will continue to fall this year as the economic recovery continues.
In the US, we estimate ISM manufacturing fell to 54.0 in June but regional PMIs and Markit PMI have pointed in different direct ions (an increase and a fall, respectively).
Tomorrow in Sweden, we expect the Riksbank to stay on hold but remove its small cut probability in the updated rate path.
Selected market news
Caixin China manufacturing PMI rose to 50.4 in June from 49.6 in May. Hence, the index is now signalling a slight expansion rather than a slight contract ion in Chinese manufacturing. It was somewhat bet ter than expected by consensus. The copper price rose on the news.
In Japan, the quarterly manufacturing business confidence survey released this morning showed t hat Japan’s manufacturers are t heir most positive since 2014. This improvement was in line with consensus. Consequent ly, the market react ion to the data release was muted.
The recent rally in EUR/USD found additional justification on Friday from stronger euro area core inflation and weaker US PCE core inflation. In the euro area, core inflation rose to 1.1% y/y, while in the US it dropped to 1.4% y/y. EUR/USD has stabilised above the 1.14 level.
Oil prices Friday found support in the news that the number of oil rigs in the US dropped by two. This is the first sign so far of US crude oil producers reacting negatively to the recent slide in oil prices.
Dry weather in the US and Europe has been a cause for concern recently in the world wheat market . On Friday, a report from USDA added to those concerns, providing additional fuel to the recent rally in world grain prices. Overall, world food prices are up about 10% since the beginning of May – something that could also potentially come to the attention of major global central banks if it starts to pass through to inflation.
