Global macro overview for 03/08/2017

Global macro overview for 03/08/2017:

A set of PMI data from the US economy is ready for the release today. The ISM Non-Manufacturing PMI is expected to slide from 57.4 points to 56. 9 points in July. The Composite PMI is expected to stay unchanged at the level of 54.4 points, together with Final Services PMI at the 54.4 as well. All of the PMI's are anticipated to stay way above the fifty level.

The IHS Markit reported last week, that "PMI survey respondents cited an improving economic backdrop and greater willingness to spend among clients in July. Reflecting this, the latest data revealed the strongest upturn in new work received by service sector firms for exactly two years". Today's data have a chance to confirm IHS Markit report and support the view, that outlook for moderate growth remains intact, even despite the expected slight decrease.

The services sector is expanding at a healthy pace and this is an important indicator of a general economic growth in the US. One can not say the same about the internal and international US politics development. After the election, it seemed that the pillar of the predecessor's presidency - the Obamacare health system - would disappear very quickly. At present many analysts are wondering if it will disappear at all. The problem is the lack of agreement among Republican senators. Despite the majority of 52:48 they lost the vote on the liquidation of the Obamacare system. As a result of breaking up as many as 3 Senators, there is a conflict on the Senate - President line. More and more investors are doubting the effectiveness of the Trump administration. They are afraid not only of the lack of the mentioned reform but also the failure of subsequent treatments including changes in the tax system. The effect of this fear is an ongoing global investor escape from the US Dollar to other currencies. The greatest beneficiary of this trend is the euro, which since the election has strengthened against the US currency by more than 10%.

Let's now take a look at the USD/JPY technical picture at the H4 timeframe. The price has failed to break back above the golden trend line around the level of 111.00 and reversed back below 61%Fibo level resistance. Despite the oversold market conditions, the market is unable to rally above the nearest resistance. The next technical support is seen at the level of 109.85.

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