Daily Broad Market Recap – May 23, 2024

The global flash PMI dump did quite a number on overall market sentiment!

The results were mostly stronger than expected, save for a couple of misses from Germany and the U.K. economy. A handful of positive revisions were announced for previous releases, too.

Here’s how major currency pairs and asset classes fared.

Headlines:

• Australia flash manufacturing PMI for May: 49.6 (49.6 previous)
• Australia flash services PMI for May: 53.1 (53.6 expected)
• New Zealand quarterly headline retail sales for Q1: 0.5% q/q (-0.3% expected, -1.8% previous)
• New Zealand quarterly core retail sales for Q1: 0.4% q/q (0.0% expected, -1.6% previous)
• Japan’s flash manufacturing PMI for May: 50.5 (49.7 expected, 49.6 previous)
• Australia’s April MI inflation expectations for the next 12 months slowed from 4.6% to 4.1%
• French flash manufacturing PMI for May: 46.7 (45.8 expected, previous reading upgraded from 44.9 to 45.3)
• French flash services PMI for May: 49.4 (51.8 expected, previous reading upgraded from 50.5 to 51.3)
• German flash manufacturing PMI for May: 45.4 (43.4 expected, 42.5 previous)
• German flash services PMI for May: 53.9 (53.5 expected, 53.2 previous)
• Eurozone flash manufacturing PMI: 47.4 (46.2 expected, 45.7 previous)
• Eurozone flash services PMI: 53.3 (53.6 expected, previous reading upgraded from 52.9 to 53.3)
• U.K. flash manufacturing PMI for May: 51.3 (49.5 expected, previous reading upgraded from 48.7 to 49.1)
• U.K. flash services PMI for May: 52.9 (54.7 expected, 55.0 previous)
• U.S. initial jobless claims: 215K (220K expected, 223K previous)
• U.S. flash manufacturing PMI for May: 50.9 (50.0 expected, 50.0 previous)
• U.S. flash services PMI for May: 54.8 (51.2 expected, previous reading upgraded from 50.9 to 51.3)
• Japanese national core CPI for April: 2.2% y/y (2.2% expected, 2.6% previous)

Broad Market Price Action:

Market correlations appeared to break down during the Asian trading session, as crude oil and gold traded lower while the S&P 500 index cruised higher.

Meanwhile, Treasury yields and the U.S. dollar were treading carefully while traders braced for the U.S. flash PMI readings due later in the day. Bitcoin price action was also relatively quiet until the start of the London session while traders digested mixed but generally upbeat PMI readings from Europe.

Eventually, oil found an intraday bottom then proceeded to advance to the $78.50 per barrel region before turning lower again. On the other hand, bitcoin and gold tanked while U.S. yields popped higher upon seeing stronger than expected U.S. PMI figures.

FX Market Behavior: U.S. Dollar vs. Majors

Overlay of USD vs. Major Currencies Chart by TradingView

Consolidation was the name of the game for majority of the dollar pairs leading up to the global PMI releases, except for the Kiwi which was off to a running start thanks to stronger than expected quarterly retail sales figures.

Volatility then picked up for the euro, as the flash PMI readings started coming in mostly stronger than expected for France and Germany. Later on, the pound dipped upon seeing a weaker than expected U.K. services PMI figure but quickly pared losses.

Upside surprises in Uncle Sam’s flash manufacturing and services PMI readings for May led to a dollar rally across the board, as the numbers likely highlighted Fed officials’ plans to keep rates higher for longer.

The U.S. currency was able to hold on to its post-PMI gains, particularly against the Loonie, Aussie, and British pound.

Upcoming Potential Catalysts on the Economic Calendar:

• U.K. retail sales at 6:00 am GMT
• SNB Chairman Jordan’s speech at 10:45 pm GMT
• Canadian retail sales at 12:30 pm GMT
• U.S. durable goods orders at 12:30 pm GMT
• FOMC member Waller’s speech at 1:35 pm GMT
• U.S. UoM revised consumer sentiment index at 2:00 pm GMT

There’s not much in the way of top-tier market catalysts for today, so mid-tier releases like the retail sales figures from the U.K. and Canada might catch traders’ attention.

Keep your eyes and ears peeled for hawkish commentary from FOMC member Waller, as well as potential upgrades to the UoM consumer sentiment reading, that might spur additional USD gains, too!

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