Pre-weekend dollar boost? Downbeat figures could exacerbate risk-off mood
- Economists expect Markit’s PMIs to remain stable in July.
- Concerns about inflation and covid could push these surveys even lower.
- Investors could flee to the safe-haven dollar ahead of the weekend.
Two steps down, one step up – that has been the playbook for risk-averse markets. What happens when traders have little time to act ahead of the weekend and the last word belongs to a downbeat figure? It is easy to imagine how markets tumble and the safe-haven dollar gets a final boost.
Markit’s preliminary and forward-looking Purchasing Managers’ Indexes for July may provide that spark. The economic calendar is pointing to stable reads in July – the Manufacturing PMI to tick down from 62.1 to 62 and the Services PMI from 64.6 to 64.8. These reads seem out of line with several developments, creating an opening for a downside surprise.
Why would these figures fall short?
First, Markit’s Services PMI…