Strong data lift riskier assets despite Syrian tensions
The summer doldrums should be lifted during the first week of September as traders return from vacations with tensions mounting in Syria. President Barack Obama has taken the evidence that the Syrian regime attacked its own people with Chemical to the US populous and has asked congress to approve a limited military strike. By authorizing the mission the President will show the world that the US stands as one. European data along with Chinese PMI information came in better than expected lifted equities on the first day of the new month.
Asian data release on Monday was mixed, but Chinese data came in better than expected helping equity bourese. China’s August PMI survey on manufacturing was solid, confirming the recovery story. The official Chinese purchasing managers index climbed to a 16-month high of 51.0 compared to the 50.6 expected by economists while HSBC purchasing managers index came in in line with estimates at 50.1 and 47.7 final in July. The 50 print was the first reading above 50 since April and the biggest gain in 3 years. The solid reading shows the Chinese economy continues to improve at a moderate rate. Additionally, new orders which reflect future PMI prints came in at 52.4 which is the highest print in more than 16 months.
Europe also showed gains in the manufacturing space. The euro-zone manufacturing sector grew at the fastest rate in more than 24-months according to Markit. Its monthly PMI report increased to 51.4 in August from 50.3 in July, showing that the economy continues to grow at a modest pace.
The GBPUSD moved above resistance near the 10-day moving average at 1.5566, and is poised to test target resistance near the June highs at 1.5750. Support is seen near the recent lows at 1.5450. Momentum is lower with the MACD diverging from price action on the currency pair which could be a warning that the currency pair could turn lower.
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