Thursday Highlights – Currency Thoughts
Thursday Highlights
May 21, 2026
Whereas it was President Trump’s questionable decision to launch a military attack on Iran with the intent of never allowing the current regime there to possess nuclear weapons lit the fire of global inflation and the second major supply shock of this decade, purchasing manager surveys reported today suggest that other countries so far are suffering more severe consequences than is the U.S. economy.
According to preliminary findings of the May survey, the U.S. composite PMI remained steady and above the 50 level of neutrality with a score of 51.7, including a 49-month high in the manufacturing component. Fewer jobless insurance claims last week at 209k also suggest that the labor market is not as weak as one might presume under the circumstances.
Among other preliminary PMI surveys, Japan’s composite index dropped 1.1 points to a 5-month low of 51.1. The readings there for both manufacturing and services were lower than those in April.
Australia’s manufacturing, services and composite PMI readings of 50.3, 47.7 and 47.8 each constituted 2-month lows.
India’s composite PMI score of 58.1 attests to its continuing very high activity rankings among major world economies, but such was lower than April’s reading.
Euroland’s economy appears headed for a 0.2% GDP contraction this quarter. The composite PMI of 47.5 indicates the sharpest contraction in 31 months, led by a 63-month low service sector component. The German and French readings worsened to a 4-month low of 48.8 and a 66-month low of 42.7, and each of those economies had sub-50 scores in both manufacturing and services.
Other Euroland data reported today pointed to a shrinking current account surplus and less activity in construction.
The British composite PMI, a13-month low of 48.5, was also under the 50 neutrality level.
Consumer confidence in the euro area was marginally less pessimistic in May but nonetheless significantly bearishwith a reading of -19.
Among inflation data this Thursday,
- South Korean producer price inflation jumped to a 42-month high of 6.9% in April from 4.1% in march and 1.9% in January.
- Slovenian PPI inflation more than doubled to 1.4% last month. Polish PPI inflation of 1.9% hadn’t been expected to print above zero and was the most in 35 months.
- In Hong Kong, consumer price inflation stayed at 1.7% for a third straight month.
In spite of U.S.-led global protectionism, Japan’s trade balance swung from a JPY 150 billion deficit in April 2025 to a surplus of JPY 302 billion last month. Japanese core domestic and foreign machinery orders respectively rose 6.4% and 31.0% last quarter, but a lot of that was front-loaded demand.
Swiss industrial production fell by 1.6% on quarter and 7.1% on year in the first quarter of 2026.
Central bank policymakers in Jamaica and Egypt respectively left their key interest rates unchanged at 5.5% and 19%, respectively. Statements released by both authorities cited the repercussions of the Middle East turmoil as reasons for approaching their missions with caution.
Copyright 2026, Larry Greenberg. All rights reserved.
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