Lower Oil Price and Many July Manufacturing Purchasing Manager Surveys Reported
August 3, 2026
(128) President Trump repeated the prior weekend’s geopolitical gambit. Like then, he had threatened before the weekend that massive military strikes against Iran were imminent, only to rescind that order and announce that a diplomatic approach will be tried instead. In both instances, the price of West Texas Intermediate crude oil has traded 6.8% lower than its Friday close early the following Monday morning. Attesting to the fragility of this latest halt to hostilities, Iranian sources insist that talks have not been direct but rather through a third party. Taking a longer-term view of the flip-flopping strategy, however, one realizes some genius in the approach. If military pressure had stayed unrelenting since the end of February, one can imagine the current oil price trading well above $100 rather than somewhat below $80 as it is now doing. In a wholly separate show of chutzpah, President Trump is invoking the 1930 Smoot Hawley tariff to justify a 50% tariff against Canada announced two weeks ago, which is somewhat like citing the infamous Dred Scott decision of 1856 as a growth-promoting initiative to reinstate the practices of slavery in selective states.
Rises in the dollar and U.S. equities have been the as-expected reaction of to today’s much lower price of oil. One forex exception involves the yen, which has strengthened 0.3% against dollar, as officials in Japan and the United States confirmed that they had intervened in support of the Japanese currency in a joint exercise late last week. While concerted intervention was very common in the first decade of the flexible exchange rate era, such hardly ever has occurred this century.
The Japanese Nikkei-225, down 0.9% this Monday, was an outlier, too. Euroland stock markets are higher, and equities clowed with gains of 0.7% in India, 0.6% in Taiwan and 0.5% in Australia, New Zealand and Hong Kong. Gold is barely changed, but Bitcoin has lose 1.3%.
Most of today’s reported July diffusion indices from manufacturing purchasing manager surveys have readings above 50.0, implying strengthening business conditions last months. Exceptions were experienced in Turkey (a 2-month high of 47.7), (Poland a 2-month high of 49.0), the Absa-compiled South African survey (a 7-month low of 46.8), Romania (a 6-month high of 48.8), Brazil (a 5-month low of 47.5) and France (a 2-month low of 49.8). The manufacturing sector score for Euroland as a whole (51.9) was a 3-month high, but a deeper dive into the bloc’s latest results unveils reasons for caution. Production figures, but not measures of demand, were encouraging. Supply chains remain disrupted, and inflation is more elevated than the ECB wants. The twin wars in Ukraine and and the Middle East threaten to overlap to Europe’s detriment. India’s PMI of 53.5 was 0.7 points lower than June’s reading and at a 59-month low.
The U.S. Institute of Supply Management’s July manufacturing purchasing manager s survey shows solid expansion. The overall 55.6 reading was its highest in 51 months. The employment sub-index improved 3.1 points to 52.8, and the index measuring orders pointed to even more solid expansion at 56.7. The price index did not fall as much as expected, and at an elevated 71.1 gives hawkish members of the FOMC more confidence that Fed policy ought to tighten.
Turkish consumer price inflation again exceeded 30% in July but, at 31.75%, was marginally lower than in April or May. Core CPI edged up to a 2-month high of 29.9%, and producer price inflation slid 0.3 percentage points to 27.8%.
Similar rates of CPI and PPI inflation in Pakistan last month of 9.2% and 9.4% were each their lowest in four months.
Kazakhstani CPI inflation edged 0.1 percentage point lowr to a 16-month low in July of 10.2%.
Peruvian CPI inflation climbed to a 37-month high of 4.37% in July.
July’s 2.88% rate of consumer price inflation in Indonesia last month represents a 3-month low.
Swiss consumer price inflation was only 0.4% last month, a 4-month low and not far above the -0.1% low touched in May 2025. Core CPI printed at 0.3% for a fourth straight month.
German retail sales volume had risen by an encouraging 1.2% in May only to drop by a greater-than-forecast 1.1% in June. Sales were actually 0.2% lower than in June 2025.
Copyright 2026, Larry Greenberg. All rights reserved.
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