Home USD/JPY: Trading the ISM Manufacturing PMI

USD/JPY: Trading the ISM Manufacturing PMI

The ISM Manufacturing PMI (Purchasing Managers’ Index) is based on a survey of purchasing managers in the manufacturing sector. Respondents are surveyed for their view of the economy and business conditions in the US. A reading which is higher than the market forecast is bullish for the dollar.

Here are all the details, and 5 possible outcomes for USD/JPY.

Published on Tuesday at 15:00 GMT.

Indicator Background

The views of purchase managers on the economy are always important, as they are considered to be attuned to the latest economic and financial developments, and their expectations could be an indication of future economic trends.

The index improved to 53.2 points in November, beating the forecast of 52.1 points. This marked the highest reading for the indicator since June. The upward trend is expected to continue in December, with an estimate of 53.7.

Sentiments and levels

With the Trump presidency around the corner, the markets are expecting US growth to continue, which could mean more rate hikes from the Federal Reserve. If this happens, the US dollar will likely post broad gains. So, the overall sentiment is bullish on USD/JPY towards this release.

Technical levels, from top to bottom: 120.25, 118.79, 117.52, 115.90, 114.55 and 113.04

5 Scenarios

  1. Within expectations: 50.0 to 57.0: In such a case, USD/JPY is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 57.1 to 61.0: An unexpected higher reading could send the pair above one resistance line.
  3. Well above expectations: Above 61.0: A sharp expansion in the manufacturing sector could push USD/JPY upwards, and a second resistance line might be broken as a result.
  4. Below expectations: 46.0 to 49.9:  In  this scenario, USD/JPY could drop and break one level of support.
  5. Well below expectations: Below 46.0: A very weak reading would  point to sharp  contraction in the manufacturing sector. This could push the pair below a second support level.

For more about the yen, see the USD/JPY forecast.

Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.