Daily Market Commentary 24th August 2023

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PMI data in Europe and the US was extremely weak, with the Services sector collapsing in Germany, following the collapse in Manufacturing. Germany remains the engine room for Europe, but is coughing and spluttering into a deep recession, following the monumental contraction in Manufacturing data and now Services PMI data. This led to a sharp fall in Bond Yields and a rise in equities. It only adds to the pressure on Central Bankers, meeting in Jackson Hole (Wyoming) this week, who must consider the falling economy and inflationary pressures. BRICS Summit has green lighted a major membership expansion, which will impact global trade and the logistics of this trade. Flagging interest rates allowed the EUR to trade around 1.0850, while the GBP slipped back below 1.2700.

The softer reserve allowed the commodity currencies some reprieve, with the AUD bouncing above 0.6450, while the NZD looks to renew the attack the ‘BIG figure’ of 0.6000. Australian PMI data was weak, but commodity demand improved, with stronger demand from Japan. Japanese PMI numbers were an ‘island of progress’ and rallied into positive territory. NZ Q2 Retail Sales fell into negative territory, reflecting the hardships the economy is handing out to the consumer. Rising inflation and interest rates soaring are taking their toll on the average punter. Markets are watching Central Bankers at the Jackson Hole Symposium and the world leaders at the BRICS Summit in South Africa.

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