Global macro overview for 24/08/2018

Markit Economics presented the preliminary PMI results from the Eurozone early in the morning. The report shows that despite the forecasts assuming the maintenance of PMI for the industrial sector in the Eurozone at the current level (55.1), its drop to 54.6 was finally recorded. Data on the services sector was slightly better, according to forecasts, the index increased to 54.4 from 54.2 previously. However, it turns out that such poor results of the industrial PMI caused that despite the forecasts assuming an increase in the value of the collective PMI index to 54.5 from 54.3 previously, it eventually only increased to 54.4.

In the early afternoon, the market's participants met one of the most important data from the United States. Of course, here is the weekly report of the US Department of Labor on the number of applications for unemployment benefit. As reported by the Department of Labor, the number of pre-declared unemployed in the week ending on August 18 this year was at the level of 210,000, which means a drop by 2,000 compared to the previous week. A positive impression of this publication is also supported by the fact that the surveyed economists expected a growth of up to 215,000. The final reading turned out to be a pleasant surprise. It also fell four-week average, which amounted to 213 750, which means a decrease by 1 750 in relation to the moving average of the previous week. A positive overtone of this publication was also supported by the fact that the number of continuing applications for unemployment benefits in the week ending on August 11, fell to 1,727 thousand against 1,729 thousand a week earlier. The forecasts assumed, however, that the number of continuing jobless claims will increase to 1,731 thousand.

A little bit later, Markit Economics shared with the global investors next PMI results, this time from the United States. According to the published report based on the preliminary data on a monthly basis, the industrial PMI will fall off in August this year to 54.5, which is a result not only of the previous publication (55.3), but also from already pessimistic forecasts (55.1). Data on the services sector were equally poor, however, despite forecasts assuming only a symbolic drop in the value of the ratio to 55.9 from 56.0 previously, depreciation was finally recorded up to 55.2. Nevertheless, it is worth remembering that decline in the value of the indicator only suggests a slowdown in growth in the industrial and service sector. As long as its value is above 50 points the economy is growing, but a bit slower though.

The market participants also got to know the results of home sales in the US primary market for July this year. According to the latest Census Bureau report in July, this year sales of new real estate in the United States dropped to 627 thousand from 638 thousand which were recorded in June 2018. The drop in sales by 1.7% led to the expectations of economists who expected an increase of 2.2%. Consensus assumed the sale of existing properties at the level of 643 thousand.

Let's now take a look at the US Dollar Index technical picture at the H4 time frame. The market bounced from the level of 94.93 on a wave of the solid data from the US economy, but was capped by the blue trend line around the level of 95.66. The market has made a kind of an Evening star candlestick pattern and the price reversed towards the level of 95.44. The next support is seen at the level of 95.15, but the market conditions are still favoring the possibility of another spike higher towards the 96.08 level.

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