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The data published by the Institute for Supply Management (ISM) today showed that the business activity in the US manufacturing sector contracted in August with the headline PMI slumping to its lowest level in three years at 49.1 and missed the market expectation of 51.1.  

With the initial reaction, the Greenback came under a renewed selling pressure and allowed the EUR/USD pair to recover to 1.0950 area.

“Comments from the panel reflect a notable decrease in business confidence. August saw the end of the PMI ® expansion that spanned 35 months, with steady expansion softening over the last four months,” the publication read.

“Demand contracted, with the New Orders Index contracting, the Customers’ Inventories Index recovering slightly from prior months and the Backlog of Orders Index contracting for the fourth straight month.”