Flash US PMI Data Shows Growth Slowdown in April

Flash US PMI data reveals a growth slowdown, and the Australian CPI print boosts the Aussie. The market awaits Durable Goods Orders.

The latest flash US Composite Purchasing Managers’ Index (PMI) released for April indicates a slowdown in output growth, raising concerns about the strength of the US economy. The data, compiled by S&P Global, revealed a decline in both manufacturing and services sectors, painting a picture of weakening demand.

The Composite PMI, a measure of overall economic activity, fell to 50.9 from 52.1 in the previous month, suggesting a deceleration in growth momentum. Notably, the manufacturing PMI contracted to 49.9, missing its estimate of 52.0, while the services sector also showed a slowdown, dropping to 50.9 from 51.7.

Several service providers cited elevated interest rates and high prices as factors restricting demand in April, adding to concerns about the economy’s resilience.

The release of the PMI data immediately impacted the dollar index (DXY), which initially traded above the 106 threshold but tumbled following the announcement. The DXY dropped to 105.60 overnight before retracing slightly to 105.70 by the end of the US session.

Analysts note that while the Composite PMI has expanded for 15 consecutive months, the weaker-than-anticipated reading for April raises doubts about the pace of growth in the coming months. Investors are now closely watching for further economic indicators to gauge the trajectory of the US economy.

Flash US PMI Data Shows Growth Slowdown in April

Focus Shifts to Asia Session: Australian CPI Print Creates Strong Tailwinds for Aussie

Inflation data out of Australia took center stage during the Asia session, with the monthly Consumer Price Index (CPI) indicator increasing to 3.5% year-on-year in March. The quarterly reading also surpassed expectations, rising to 1% in the first quarter of 2024, up from 0.6% in the previous quarter.

The robust CPI print provided strong tailwinds for the Australian dollar, which surged above 0.6500 against the US dollar, reaching as high as 0.6525 following the news release.

What to Expect Next: Key Events and Market Bias

Market participants are eyeing the release of Durable Goods Orders later in the day. They expect a significant gain of 2.5% for March. Positive surprises in the data could serve as a bullish catalyst for the dollar.

In terms of market bias, analysts anticipate a weakly bearish outlook for gold over the next 24 hours. Positive Durable Goods Orders could further strengthen the dollar, exerting downward pressure on gold prices. Meanwhile, analysts anticipate robust CPI data will bolster the Australian dollar, maintaining a medium bullish bias.

Other major currencies, such as the Euro, Pound, Canadian Dollar, and Japanese Yen, are also poised for various levels of bullish or bearish bias, largely influenced by domestic economic data and central bank policies.

According to API data, oil markets remain weakly bullish, buoyed by a surprise drawdown in US crude inventories. Investors are eagerly awaiting confirmation from the EIA inventories report later today.

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