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US ISM Manufacturing Falls Again
The US Dollar is trading lower today on the back of a set of weaker-than-forecast manufacturing readings yesterday which saw DXY losing around 0.7% on the session. While the final manufacturing PMI for last month was revised higher to 51.3 from 50.9 prior, the ISM manufacturing PMI was seen dropping to 48.7 from 49.2. below the 48.9 the market was looking for. The data marks the second consecutive monthly contraction in the reading. Looking at the details of the report, the new orders component fell sharply to 45.4 from 49.1 while the inflation component dropped from 60.9 to 57.
Inflation Pressures Subsiding
The slump in the Dollar looks likely to be aligned to the drop in the inflation component of the report. With PCE coming in below forecasts on Friday and the recent CPI print cooling for the first time this year, there is a growing sense that inflation might be topping out again, putting the focus back on near-term easing expectations.
US Jobs Data in Focus
Looking ahead this week, traders will be looking at incoming US labour market data starting with today’s JOLTS job opening data, the ADP figure tomorrow, unemployment claims on Thursday and the headline NFP data-set on Friday. If we see any further weakness, this should be firmly bearish for USD through the end of the week.
Technical Views
DXY
The latest failure at the 104.97 level has seen the index breaking down below the bull channel from YTD lows. 103.48 will be the next support to watch and with momentum studies turning bearish, risks of a deeper push are growing unless bulls can get back above 104.97 this week.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.