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ISM Manufacturing PMI exceeds expectations – dollar extends gains

The ISM Manufacturing PMI for August edged up to 55.7 points. It was expected to slide to 54.2 points in August, from the high level of 54.2 seen in July. This is the first big data point towards the Non-Farm Payrolls release on Friday. This NFP is critical for QE tapering in September. Also other figures surprised to the upside. The employment sub component posted a small disappointment with a drop from 54.4 to 53.3, but this still reflects nice growth.

The dollar traded higher in the wake of the new month, with EUR/USD trading below 1.3170. It is now below 1.3150. USD/JPY was around 99.50 and it is now at 99.70.  GBP/USD down to 1.5550 and is down to 1.5530.

Other important components: the forward looking new orders figure jumped to 63.2 points from the already high 58.3 points. So, August so very quick growth in the manufacturing sector. Prices advanced from 49 (contraction) to 54 points now.

In addition, two more figures were released in the US:

  • Construction spending  rose by 0.6%, double the early expectations of 0.3%.
  • IBD/TIPP Economic Optimism was predicted to advance from 45.2 to 46.2 points. The publication was delayed.

More currency reactions:

Earlier, Markit’s final manufacturing PMI for August saw a downgrade from 53.9 originally published to 53.1 now.

Further reading:  September offers potential for further dollar strength

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.