A disappointing PMI out of France has set a cautious tone across markets. All eyes now turn to the UK, US, and the Fed for signals on what’s next 🤔
Key Insights:
- Pound Under Pressure: The British pound faced renewed downward pressure, with investors anticipating the release of new Purchasing Managers' Index (PMI) data.
- Conflicting Signals from the Fed: The Federal Reserve delivered a mixed bag of messages, leading to uncertainty in the markets.
Market Recap:
Fed's Conflicting Signals: Following the recent Federal Reserve meeting, which highlighted diverse opinions on future policy, a series of Fed officials have begun speaking out. The President of the St. Louis Fed, Musalem, backed the recent rate cut as a protective measure against a potential decline in the job market. However, he also raised concerns about further cuts due to persistent inflation risks.
US Dollar Rallies: The US Dollar strengthened in the wake of comments from Fed speaker Hammack, who advised a cautious approach to rate cuts to prevent an increase in inflation.
Pound's Retreat: The British pound continued its downward trend against the euro, finding temporary stability at August's low points. This occurred as traders and investors awaited the release of new PMI data, which will provide further insight into the UK's economic health.
Today's Overview:
A Shift in Economic Activity
This morning, key economic data from France, known as the Purchasing Managers' Index (PMI), came in weaker than expected. The PMI surveys business managers to gauge the health of the economy, with a reading below 50 indicating a contraction. All sectors in France have now moved into this contractionary territory, signalling a broad slowdown in business activity.
What this means: This has led to a weakening of the Euro (EUR) as traders and investors react to the disappointing numbers. The market is now closely watching for similar PMI releases from Germany and the wider Eurozone to see if this trend is widespread.
The Road Ahead: UK, US & the Fed
We are also expecting to receive PMI data from both the UK and the US today. These reports will provide a fresh snapshot of economic activity for September. Based on early indications, it's anticipated that we may see a slight cooling of activity across all areas.
In addition to the economic data, the market will be focused on a series of speeches from influential figures at the US Federal Reserve, including Chair Jerome Powell, Raphael Bostic, and Michelle Bowman. Their remarks will be carefully scrutinised for any new clues about the future direction of US interest rate policy.
In a nutshell: The market is currently navigating a period of conflicting signals from both economic data and central bank commentary. The disappointing French PMI data has set a cautious tone, and the upcoming releases from the UK and US, along with insights from the Fed, will be critical in shaping the market's direction for the rest of the day.
23rd September 2025
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