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The US yield curve is still inverted, this has continued for 14 successive days. Fragile market sentiment prevailed on Friday, as equities are seesawing, due to US S&P Global PMI data, flashing a contraction in the services sector and its Composite index, while traders seek safety towards US Treasuries, with US bond yields falling, undermining the US dollar.
The GBP/JPY slid for the third straight day creep below the 50-day EMA at around 163.51, spurred by a negative market mood, blamed on US corporate earnings in addition to weaker worldwide S&P Global PMIs renewing recession-linked fears among investors.
Economic Data
Business activity in the US service sector retreated in early July with S&P Global Services PMI dropping to 47 versus 52.7 in June. This reading came in much weaker than the market expectation standing at 52.6.
The US dollar came under strong selling pressure after this report and the US Dollar Index was last seen losing 0.3% on the day at 106.30.
Other Developments
US crude oil prices stabilized below $95 per barrel for the first time since April in choppy trading circumstances on Friday after the European Union announced it would allow Russian companies to ship oil to third countries under an adjustment of sanctions agreed by member states this week.
Sentiment was not helped by worries over advertising spending. The only problem is in this time frame the advertising industry involves some of the mega tech names, Google, Meta, Twitter, etc.. which all saw sharp falls in their share prices.
Speaking about Twitter, it released its results on Friday before the open and confirmed the setup from SNAP. Twitter missed due to a strong dollar and weakening advertising spending. Shares of social media firms fell sharply on Friday after Twitter and Snapchat’s owner signaled advertisers had tightened their purse strings in response to a darkening economic outlook.
Next week, traders brace for the July US FOMC’s monetary policy decision. The confusion in investors’ minds continues to feed through to the marketplace as the early week rally peters out and Friday sees a turnaround. With the rally reaching around 7% for the S&P 500 (SPY).
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