Danske Research Team
Danske Bank A/S
Summary and outlook
Global indicators currently paint a very divergent picture of the world. The US economy is booming with strong leading indicators and ISM figures. On the other hand, data in the euro area remains weak while Japan is showing tentative signs of stabilisation. Chinese indicators point to slowing again after a period of strength.
We expect global growth to continue to show a divergent picture over the coming quarter. US ISM is expected to go lower but from a very high level. We expect euro PMIs to stabilise and edge higher towards the end of the year driven by lagged effects from stronger US and Chinese growth and a weaker euro. In China, we expect a further decline in PMI over the coming months as investment growth is easing again.
Details
In the US, the OECD leading indicator continued to increase in August and, along with strong ISM numbers, it seems underlying growth is gaining strength in the US. Looking ahead, we expect to see moderation in ISM manufacturing, partly in response to weaker exports based on the weakness we see in the rest of the world.
In the euro area, indicators continue to look soft. The OECD leading indicators decreased in August, ZEW has fallen a lot and ifo expectations have moved lower as well. However, real money growth is still holding up, suggesting that the current weakness is temporary.
The picture has been mixed recently. The OECD’s leading indicator is still strong but hard data and PMI have weakened. Very weak figures for industrial production suggest that GDP growth could drop below 7.0% in Q3 from 7.5% in Q2. Japanese data is also mixed as industrial production is weak but PMI has been trending higher in recent months.
Scandi manufacturing data is generally soft whereas services are holding up better.
This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector.
This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange.
Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.
Recommended Content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.