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The Global PMI covering both services and manufacturing, produced by JP Morgan and IHS Markit in association with the ISM and IFPSM, rose in June to 54.2 from 54.0, points out Greg Gibbs, Analyst at Amplifying Global FX Capital.  

Key Quotes

“A sign that the global economy retains moderate to solid momentum.”

“However, it suggests that tariff fears have dampened the manufacturing outlook.   There PMI series showed a divergence, with the services PMI rising for a second month in a row to 54.6, approaching its high in February, while the manufacturing PMI fell for a second month to 53.0, a low since July last year.”

“We don’t pay for the component data, but the press release noted that the “pace of increase in new export business easing to near-stagnation” in the global manufacturing PMI (implying it was just above 50.0).”

“The PMIs suggest that global policymakers will continue to voice alarm over US protectionist policy, noting risks that it may drag down global growth, especially if it escalates and damages business confidence.”

“However, they are also likely to stick to their reasonably upbeat growth forecasts, considering that broader indicators, underpinned by services retain moderate to solid growth.”

“As FX analysts, we might see more risks ahead for countries that rely more heavily on global goods trade.   This might include Asian markets.”

“The Eurozone is also more reliant on trade than other major economies.   However, as we noted in our report last week, we would not be surprised to see the heat turned down on US, EU and NAFTA trade rhetoric, and a switch in gear in the US to retain its focus on trade and investment dealings with China.”

“Considering some improvement in recent Eurozone economic data, this may lead to some strengthening in European currencies, including the EUR and GBP vs. Asian currencies.”