Brexit Worries Sent The Pound Lower
The British pound stays weak on Brexit uncertainty and today's manufacturing PMI data. UK PMI manufacturing dropped to 52.8 in August, down from 53.8 and missed expectation of 53.9. That’s also the lowest level in 25 months.
The euro is trading without a single momentum against the US dollar. In addition, the single currency is pressured by concerns about trade war and the crisis in emerging markets. The EUR/USD pair almost did not react to data on business activity in the manufacturing sector of the Eurozone, France and Germany. Still, euro is trading as the second strongest one for today.
Eurozone PMI manufacturing was finalized at 54.6 in August, unrevised. It’s -0.5 lower than July’s final reading at 55.1. German PMI manufacturing was revised down by -0.2 to 55.9 and hit a 2-month low. France PMI manufacturing was revised down by -0.2 to 53.5 but still hit a 3-month high.
European stocks were mixed today. FTSE rose by 0.92%. CAC gained 0.04%. DAX, fell by 0.37%. Earlier today, all major Asian indices declined. Nikkei closed down 0.69%, Hong Kong HSI dropped by 0.63%, China Shanghai SSE fell by 0.17%. Singapore Strait Times declined by 0.20%.
EU chief negotiator Michel Barnier said that he is ‘strongly opposed” to May’s proposals on trade. Barnier said its “not practical”. He added, “it is impossible to tell exactly where a product ends up, on the UK market or in the internal market.” And, “the British proposal would be an invitation to fraud if implemented.” Separately it was reported, that PM Theresa May ruled out the prospect of a second Brexit referendum.
Today’s data also showed, that China Caixin PMI manufacturing dropped -0.2 to 50.6 in August, missed expectation of 50.7. Japan PMI manufacturing was finalized at 52.5 in August, unrevised, up from July’s 52.3. New Zealand Terms of Trade Index rose only 0.6% qoq in Q2, versus expectation of 1.1% qoq. Australian retails sales rose 0.0% mom in July, below expectation of 0.3% mom.