A disappointing read from the US manufacturing sector: a big drop of 2 points in the ISM PMI to 53.5 points. The unemployment component is also down from 56 to 54.1 points – an ominous sign for the NFP on Friday. Also new orders are way down from 57.8 to 52.9 points and prices are all the way down to only 35 points, the worst since 2009.
The US dollar is falling on the bad news:
- EUR/USD is moving to the top of the range. It was supported earlier by some signs of compromises between Greece and the euro-zone.
- GBP/USD is up to 1.5070. The UK manufacturing PMI is actually up.
- USD/JPY is down to 117.30
- USD/CAD is below 1.26. The loonie is supported by oil more than anything at this moment.
- AUD/USD is making its way above 0.7815. In Australia, speculation is mounting about the rate decision by the RBA later on.
- NZD/USD is climbing above 0.73 on this news, recovering after the big falls.
The ISM Manufacturing purchasing managers’ index was expected to slip to 54.9 points in January after 55.5 beforehand. This is the first important hint towards the all important Non-Farm Payrolls report on Friday, with the employment component sometimes stealing the show.
The US dollar opened the week slightly lower against most currencies, but moves are not extreme so far.
In addition, construction spending carried expectations for a rise of 0.9%. This is overshadowed by the ISM number. The actual figure is only 0.4% – another disappointment
Earlier, the Fed’s favorite inflation figure slipped as expected. Personal income was on the rise while spending slipped.
More: EUR/USD wedge – where will it break to?
