- U.S. ISM Manufacturing Survey to Narrow to 60.0 from 60.8, the Highest Reading Since May 2004.
- Near-Term Outlook for EUR/USD[1] Clouded with Mixed Signals. April Opening Range in Focus.
Trading the News: U.S. ISM Manufacturing
A downtick in the ISM Manufacturing survey may generate near-term headwinds for the U.S. dollar[2] as it dampens the outlook for growth and inflation.
Keep in mind, Europe remains closed on Monday in observance of the Easter holiday, with the foreign exchange market likely to face choppy conditions as market participation remains thin.
Nevertheless, signs of waning businesses confidence may dampen the appeal of the greenback as it limits the Federal Reserve’s scope to extend its hiking-cycle, and Chairman Jerome Powell and Co. may continue to project a neutral Fed Funds rate of 2.75% to 3.00% as ‘recent data suggest that growth rates of household spending and business fixed investment have moderated from their strong fourth-quarter readings.’
However, another unexpected uptick in the ISM survey may drag on EUR/USD as it boosts bets for four Fed rate-hikes in 2018, and a further improvement in business sentiment may encourage the Federal Open Market Committee[3] (FOMC) to adopt a more hawkish tone at the next interest rate decision on May 2 especially as ‘inflation on a 12-month basis is expected to move up in coming months and to stabilize around the Committee's 2 percent objective over the medium term.’
Impact that the ISM Manufacturing survey had on EUR/USD during the previous release
|
Period |
Data Released |
Estimate |
Actual |
Pips Change (1 Hour post event ) |
Pips Change (End of Day post event) |
|
FEB 2018 |
03/01/2018 15:00:00 GMT |
58.7 |
60.8 |
+5 |
+95 |
February 2018 U.S. ISM Manufacturing
EUR/USD 5-Minute Chart
The ISM Manufacturing survey unexpectedly improved in February, with the index climbing to 60.8 from 59.1 the month prior to mark the highest reading since May 2004. A deeper look at the report showed the Employment component climbing to 59.7 from 54.2 in January, with the Prices Paid index rising to 74.2 from 72.7, while the gauge for New Orders narrowed to 64.2 from 65.4 during the same period. EUR/USD showed a limited reaction despite the better-than-expected print, with the pair snapping back from a session low of 1.2155 to end the day at 1.2267.
EUR/USD Daily Chart
Near-term outlook for EUR/USD is clouded with mixed signals as the pair fails to test
