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The French PMI manufacturing index declined to 49.0 for July from 52.4 while the services-sector index dipped sharply to 51.9 from 57.3 with both figures well below consensus forecasts and the data triggered a sharp Euro dip. The German services-sector data provided an element of relief, although the services sector also registered a significant monthly setback. The Euro-zone PMI manufacturing index overall declined marginally to 51.7 from 51.8 with the services index at 50.1 from 54.7.

The data was important in triggering notable Euro losses in early European trading and the currency continued to lose ground as pressure for a correction increased. 

The US flash PMI manufacturing index strengthened to 53.6 from 50.9 previously and above consensus forecasts of 51.9. The services-sector index also strengthened to 54.8 from 50.0 previously. US existing home sales also strengthened to an annual rate of 5.86mn for July from a revised 4.70mn and well above consensus forecasts.

The data overall triggered fresh doubts as to whether the Euro-zone would be able to sustain a faster rate of recovery than the US, especially given the recent increase in Euro-zone coronavirus cases and warnings over complacency from German Chancellor Merkel. The dollar maintained a firmer tone following the releases with a further underlying correction following recent losses and the Euro dipped to lows near 1.1750 before regaining some territory.

CFTC data recorded a marginal decline in long Euro positions to 197,000 in the latest week from the record 200,000, maintaining the threat of a sharp correction. Activity was limited on Monday with markets focussed on Powell’s comments on Thursday with the Euro around 1.1800 as underlying dollar sentiment remained weak.


The dollar gradually regained some ground on Friday as the US currency secured wider support from the data releases. US equities were able to post slight gains at the Wall Street open with the US currency recovering to the 106.00 area. US equities posted limited net gains with the dollar settling just below this level.

There was little reaction to reports that Japanese Prime Minister Abe is receiving treatment for a chronic disease as risk conditions dominated.

From the US, markets will monitor rhetoric from the Republican convention this week with a particular focus on US-China tensions. On the Democrat side, candidate Biden stated that there would be no new taxes on anyone earning less than $400,000. There was no progress on the fiscal stimulus during the weekend, but US futures and Asian markets made limited headway as blood plasma was approved as a coronavirus treatment with the dollar consolidating just below the 106.00.


The UK PMI manufacturing index strengthened to 55.3 for August from 53.3 the previous month while the services-sector index strengthened to 60.1 from 56.5. Both figures were above consensus forecasts and the composite output index strengthened to the highest level for over six years. New business strengthened, although there were further labour-market concerns as companies cut jobs at a faster pace. Sterling initially moved higher with the Euro dipping to fresh 5-week lows near 0.8950.

The UK currency moved lower following the latest press conference on the Brexit trade talks. EU Chief Negotiator Barnier expressed surprise and disappointment at the lack of progress and warned that talks were going backwards at some points. He again criticised the UK position and Prime Minister Johnson, again warning that a deal was needed by October at the latest, and repeated that a deal was unlikely at this stage. UK officials rejected Barnier’s criticism as tensions increased.

The CBI industrial orders index secured only a marginal recovery to -44 from -46 the previous month. Orders continued to decline for the month and export orders also remained well below the long-term average, maintaining underlying concerns over the outlook. Sterling lost ground on trade concerns with the Euro back above 0.9000 with the UK currency settling just below 1.3100 with sharp intra-day losses as the dollar recovered.

CFTC data recorded a long non-commercial position of 7,000 from a short position of 3,000 previously and the first long positions since the middle of April. Any fundamental setback could trigger sharp UK selling. Narrow ranges prevailed on Monday with the currency just below 1.3100 against the dollar.



The Euro was unable to make any headway against the franc on Friday amid wider losses and dipped below the 1.0750 level. The Swiss franc was resilient despite a fresh dip in precious metals while the dollar gains were held below 0.9150.

Markets will monitor the latest data on sight deposits given speculation that the National Bank had intervened last week in an attempt to push the Swiss currency weaker. The Euro traded just above 1.0750 on Monday with the dollar around 0.9115 as the US currency slipped again.



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