SPAIN DATA: August Services/Composite PMIs: Weaker Than Exp, But Still Solid
The Spanish services PMI was weaker-than-expected at 53.2 (vs 54.5 cons, 55.1 prior), somewhat disappointing after a stronger-than-expected manufacturing reading on Monday. That left the composite PMI at 53.7 (vs 54.9 cons, 54.7 prior). The composite PMI has nonetheless been above 50 for 24 consecutive months now, underscoring Spain’s position as the Eurozone growth outperformer post Covid.
Details of the PMI were solid from an activity standpoint, but its worth noting another acceleration in inflationary pressures amongst services firms.
Key notes from the release:
- “Higher activity was again principally linked to a rise in new business”…“ Some firms pointed to the release of previously delayed contract agreements as a reason for increased new work. Improved product and service provision also helped to support the marked rise in sales volumes”.
- “Firms were suitably encouraged to take on additional staff in August, largely in response to higher workloads overall”….“ Employment levels have now risen on a continuous basis for just under three years, although growth in August was noticeably slower than July’s four-month high”
- “Prices data showed a pick-up in inflationary pressures. Input prices overall rose to the greatest degree since February with firms pointing to higher supplier charges in general”.
- “Service providers took advantage of a positive demand environment by passing on their increased input costs to clients wherever possible. This helped to underpin the steepest rise in selling prices since April 2024”.
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GILTS: A slightly lower Open versus the Calls
- Gilt saw a slightly lower open vs the calls, this was driven by the tick lower in EGBs on the higher Equity Cash Open.
- Gilt futures was expected to somewhat outperforms, but it is so far sitting flat against the German 10yr on the spread.
- Respective initial support and resistance, stand at 91.86 20-day EMA , and 92.69 (Friday's high).
CHF: The Swissy extends losses, SMI is down some 2%
- USDCHF takes another small leg higher, a function of the Fall in the Swiss Index, SMI opened some 2% lower after coming back from a holiday, the Index has caught up following the Swiss tariff announcement.
- As noted earlier, while the CHF is the worst performer in G10 against the Dollar, USDCHF would need a rally all the way to 0.8161 to reverse Friday's NFP sell Off, the cross could now be eyeing a test to the 0.8100 handle.
USDCAD TECHS: Slips Sharply on USD Downdraft
- RES 4: 1.4111 Apr 10
- RES 3: 1.4019 38.2% retracement of the Feb 3 - Jun 16 bear leg
- RES 2: 1.3920 High May 21
- RES 1: 1.3879 High Aug 1
- PRICE: 1.3775 @ 08:06 BST Aug 4
- SUP 1: 1.3716/3557 20-day EMA / Low Jul 03
- SUP 2: 1.3540 Low Jun 16 and the bear trigger
- SUP 3: 1.3503 1.618 proj of the Feb 3 - 14 - Mar 4 price swing
- SUP 4: 1.3473 Low Oct 2 2024
A short-term bullish corrective phase in USDCAD remains in play despite sharp weakness Friday. On the recent run higher, price traded through the 50-day EMA at 1.3739 and this has been followed by a break of resistance at 1.3798, the Jun 23 high. Clearance of 1.3798 represents an important short-term bullish development, signaling scope for a stronger recovery. Sights are on 1.3920 next, the May 21 high. On the downside, initial firm support to watch lies at 1.3716, the 20-day EMA.
