According to preliminary assessments, the business activity index in the UK's service sector fell from 53.7 points to 51.5 points, instead of the expected 53.0 points. The manufacturing index also declined from 46.5 points to 45.0 points, lower than the forecast of 46.0 points. This led to the composite index sliding from 52.8 points to 50.7 points, which resulted in pound's weakening in the market.
Similarly, euro declined because of business activity indicators from the eurozone. The index in the service sector reportedly decreased to 51.1 points instead of 52.0 points, while the one in the manufacturing sector fell from 43.4 points to 42.7 points instead of the anticipated rise to 43.5 points. This resulted in the composite index dropping from 49.9 points to 48.9 points, lower than the forecast of 49.8 points.
This downward momentum intensified in the afternoon, when the indicators from the US came out better than expected. The manufacturing index jumped to 49.0 points instead of declining from 46.3 points to 46.0 points, while the service index decreased from 54.4 points to 52.4 points. The forecast said it will decrease only to 54.0 points. As for the composite index, it fell from 53.2 points to 52.0 points, slightly lower than the expected 52.6 points.
The overall decline in the service sector prevented dollar from rising, but the sudden growth in the manufacturing index prevented a price decline, keeping the market balanced.
As the Federal Open Market Committee meeting lies ahead, the market will likely enter a brief stagnation, especially amid the empty macroeconomic calendar. Investors will be unwilling to take risks, waiting instead for the statements of Fed members such as Jerome Powell about a potential halt in interest rate hikes and a reduction in the foreseeable future. However, recent statements by Fed representatives indicate the possibility of further tightening of monetary policy.
