Headlines:
- France June flash services PMI 48.0 vs 52.0 expected
- Germany June flash services PMI 54.1 vs 56.2 expected
- Eurozone June flash services PMI 52.4 vs 54.5 expected
- UK June flash services PMI 53.7 vs 54.8 expected
- ECB's de Cos: We will hike rates again in July, not possible to say what comes after that
- Japan finance minister says firmly watching FX moves
- UK May retail sales +0.3% vs -0.2% m/m expected
Markets:
- USD leads, AUD lags on the day
- European equities lower; S&P 500 futures down 0.4%
- US 10-year yields down 6.2 bps to 3.736%
- Gold up 0.3% to $1,918.66
- WTI crude down 1.4% to $68.53
- Bitcoin down 0.3% to $30,079
The risk mood in markets was already leaning towards the softer side earlier today but the sentiment worsened after a rather disappointing set of PMI data from Europe.
In particular, there was a stark drop in French services activity and that alongside softer numbers in Germany is leading the euro area economy to stagnation towards the end of Q2.
The miss on estimates has reignited recession fears in the region and we saw yields fall as a result, with traders getting a little less certain about a September rate hike by the ECB.
EUR/USD fell from 1.0920 to a low of 1.0845 as sellers take charge, with the pair now down 0.8% on the day at around 1.0870. USD/JPY was also briefly dragged down by lower yields to 142.80 but has bounced back to 143.20 as the dollar holds firmer across the board.
Commodity currencies remain the laggard though as risk aversion takes hold with European equities and US futures keeping lower, alongside the bid in bonds after the PMI data.
USD/CAD is up 0.4% to retest the 1.3200 mark while AUD/USD is keeping 1% down on the day at around 0.6690, not much changed after the drop in Asia trading.
It's now over to Wall Street to see if the risk-off wave will continue or if tech shares can pull off another bounce to wrap up the week.
