Recessionary conditions in Europe look like they will continue, judging b the latest Services/Composite PMI data. PMI data from across the EU, and especially Germany, plummeted to new lows and deep into negative territory. This follows the recent collapse in Manufacturing PMI numbers, especially in Germany, which have fallen off the proverbial cliff. Recessionary conditions present a serious challenge to the ECB, which have to balance inflationary pressures, rising interest rates and economic conditions. In the US, Factory Orders contracted 2.3%, while the labour market is finally beginning to cool. US Bond Yields rose again, indicating the market expects further rate rises. This supported a stronger US Dollar, with the EUR falling to 1.0700, while the GBP crashed to 1.2530.
The surging reserve did not help the wounded commodity currencies, with the AUD crashing to 0.6360, while the NZD plummeted to 0.5860. The RBA left rates unchanged, as the departing Governor warned of inflationary pressures and tougher economic conditions. The RBA Governor has passed the baton on, with inflationary conditions and recessionary fears. The new Governor will have serious challenges with extreme political pressures.