Eurozone's final PMI data in the manufacturing sector still showed growth, although it came out slightly worse than the preliminary estimate. It rose from 58.3 points to 58.4 points, whereas the preliminary estimate showed an increase to 58.6 points. The difference is insignificant, and it should not have affected the market in any way. Nevertheless, the Euro currency gradually went up throughout the European session, albeit not too much.
Manufacturing PMI (Europe):
The UK has a similar situation, where the index of business activity in the manufacturing sector was expected to grow from 57.8 points to 58.2 points. But in fact, it rose only to 58.1 points. The difference is even less significant than on the continent.
Manufacturing PMI (UK):
But as soon as the US employment data were published, the direction of movement reversed. And this is despite the fact that the data came out worse than forecasts. They were waiting for an increase in employment by 580 thousand, but it increased only by 534 thousand. Nonetheless, it turned out to be enough, especially since we are still talking about extremely high rates of employment growth. The fact is that taking into account the growth rate of the population, as well as the level of economic activity, employment should grow by about 150 thousand per month in order to maintain a stable unemployment rate in the United States. Looking here, it is almost more than three times more. Moreover, since the beginning of this year, employment has been growing much stronger than necessary from month to month.
It can be said that this is the recovery of the labor market after last year's failure, but the unemployment rate has long been below the Fed's target level. Therefore, we need to talk not about the recovery of the labor market, but about new records. This is the reason for the rather impressive growth of the US dollar. Being impressed by such results, it is not surprising that investors simply ignored the American index of business activity in the manufacturing sector, which fell from 58.4 points to 58.3 points, although it should have grown to 59.1 points. With all due respect to business activity indices, they faded against the background of labor market data.
Employment Change (United States):
Today's European statistics are unlikely to help the single European currency. The unemployment rate should remain unchanged, which means there is no reason for any fuss unlike the producer price index, which can grow from 16.0% to 18.3%. This means that inflation, which is already growing at a record pace, is likely to continue to grow while the European Central Bank is actually inactive, and market participants came up with some signals and hints from the regulator regarding a possible tightening of monetary policy. ECB representatives do not say anything like that directly, so all sorts of ambiguous messages can be interpreted as you like.
Producer Price Index (Europe):
However, US statistics are likely to have even less impact on the market since the data published in the United States on applications for unemployment benefits are expected to be multidirectional. Here, the number of initial requests should increase by 46 thousand, but the number of repeated requests may decrease by 49 thousand. That is, they will level each other, and investors will have nothing to focus on. However, there is a possibility that the US dollar will continue to gradually strengthen within the framework of the trend for its growth that began at the end of spring this year.
Number of re-claims for unemployment benefits (United States):
The EUR/USD pair is moving within the borders of the 1.1300/1.1355 sideways range, which may lead to the process of accumulation of trading forces. The most suitable trading tactic is considered to be the method of breaking a particular border. This will indicate a subsequent speculative move.
The GBP/USD pair is gradually restoring the volume of short positions, which is indicated by the price holding below the level of 1.3290. A subsequent decline can be considered in the future, which will lead to an update of this year's local low.