The Hamburg Commercial Bank (HCOB) released the final estimates of the January Manufacturing Purchasing Managers’ Index (PMI) on Thursday. Despite modest upward revisions, the PMI figures continued to indicate contraction within the manufacturing sector. At the same time, President Trump’s ongoing trade war has injected uncertainty into financial markets, impacting sentiment worldwide. Meanwhile, pivotal economic data releases are expected from both the European Union (EU) and the United States (US) throughout the week, providing further insight into the state of global economies.
The EU is set to release its estimate of the Q4 Gross Domestic Product (GDP) by the end of the week. In the US, January Retail Sales figures and the preliminary estimate of the February Michigan Consumer Sentiment Index are scheduled for publication. These data points will offer vital clues to economic health in a time of international trade tensions.
The trade war initiated by President Trump has seen the imposition of 25% tariffs on Mexican and Canadian imports, alongside a 10% levy on goods entering the US from China. These measures have significant implications for global trade dynamics, placing pressure on international supply chains and economic partnerships.
In Germany, recent data showcases a mixed economic landscape. December Factory Orders surged by 6.9% month-on-month, a positive indicator for the manufacturing sector. However, Industrial Production figures told a different story, decreasing by 2.4% in December, far worse than market expectations of a 0.6% decline.
The US labor market also displayed signs of strain. The January payrolls number came in weaker than anticipated with only 143,000 jobs added, falling short of the expected 175,000. Despite this, the unemployment rate declined slightly to 4% from 4.1%, while average wage data saw a notable monthly increase of 0.5%.
The Federal Reserve's hawkish stance from December remains a focal point amid lingering trade uncertainties. The central bank's policies continue to influence market dynamics as it navigates the complexities introduced by international trade disputes.
Financial analysts are closely observing currency movements, particularly noting that the 20-day Simple Moving Average (SMA) currently stands at approximately 1.0590, providing substantial dynamic resistance in forex markets.
The US January Nonfarm Payrolls (NFP) report revealed an addition of 143,000 new jobs during the month. However, Initial Jobless Claims for the week ending January 31 unexpectedly rose to 219,000 from 208,000 in the preceding week, indicating potential volatility in employment figures.
In Europe, inflationary pressures appear to be stabilizing. The EU published a preliminary estimate of the January Harmonized Index of Consumer Prices (HICP), revealing a year-on-year increase of 2.5%, aligning with projections. This data suggests inflation remains within manageable bounds for now.