Will PMI Break 50? Traders Waiting to See

In the currency market, last on the Euro $1.4274 down 76/100ths of a U.S cent. The Dollar is trading on a firm note with Wall Street expecting to see further improvement in the manufacturing sector this morning. The Chicago Purchasing Manager’s Index of Manufacturing (PMI) is expected to clock in with a reading of 47.2, up again from the prior month’s 43.4. Some traders think we might actually break the 50 level. A reading of 50 or higher represents expansion in manufacturing sector. This would be a very positive economic signal.

Metals are trading flat to lower this morning after last Friday’s sharp gains. Traders are pointing to a 6% decline in Chinese stocks; and a bounce in the U.S Dollar for this morning’s lower levels. Silver is down 10 cents at $14.65. Gold is $3.00 lower and trading at $954.00. Palladium remains $1.00 higher with the last trade at $287.00. Platinum is $1234.00 down $11.00.

Over in the energy markets the price of Crude is down $1.66 per barrel on nervousness surrounding severe Chinese stock market losses. Last on Oil $71.08. U.S stocks finished last Friday with a 36 point loss snapping an 8 or 9 day run of positive closes. On an overall basis the Dow gained 38 points for the whole of last week. This morning the index is being called to open 62 points lower in sympathy with Asian and European markets.

On the geo-political front; Japanese voters ushered in a new era in Japanese politics with a sound thrashing of it’s Liberal Democratic Party at the polls. Voters have decided to turn to new leadership after 50 years of business as usual.

Today’s economic calendar:

U.S. Chicago PMI
U.K. Markets Closed

Euro Trading Higher, Oil Market Quiet

This morning the Euro is trading higher by another 60/100ths of U.S cent despite a very quiet Oil market. Crude is trading 9 cents lower at $66.85 with traders digesting the recent roller coaster ride which saw Oil drop and then recover and almost $4.00 down draft. Last on the Euro $1.4140.

The metals are slightly higher in overnight trading as Asia and Europe caught up and adjusted their portfolios to reflect yesterday’s New York final $3.59 jump in the price of Oil. Silver gained another 4 cents to $13.58. Gold picked up $1.00 to $936.00. Palladium is $262.00 up $2.00. Platinum is $9.00 higher and changing hands at $1190.00.

In the stock market the Dow ended yesterday with an 83 point gain and appears to be headed for a 45 point higher open today with traders hoping to see improved U.S economic data before the open.

As for today’s data; we start the day with the advance look at our 2nd quarter Gross Domestic Product (GDP). Wall Street expects to see a 1.5% decline in economic growth compared with the first quarter’s decline of 5.5%. Bad but quite a bit better.Next comes the 2nd Quarter reading of Core Personal Consumption/Expenditure Inflation which the Fed watches very closely. The estimate calls for inflation at 2.4% versus the first quarter’s rise of 1.6%.

Later this morning we get our final piece of data with the July Purchasing Managers index of Manufacturing (PMI). The Street expects to see further improvement in manufacturing with a reading of 43 compared to June’s 39.9.

In world matters Iranians refuse to let the bloody aftermath of their elections be ignored as thousands gathered at Tehran’s main cemetery to commemorate the 40 day anniversary of those killed in anti-regime clashes. On the domestic front the health care reform bill debate rages on.