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:
- EUR/USD reached 1.3143 before bouncing, but it continues its drift lower.
- GBP/USD received excellent data today and yesterday, but was unable to conquer 1.56.
- USD/JPY was rising on lower Syrian tensions and didn’t fall on new worries. It is approaching resistance at 100.
- USD/CAD which was already dropping to 1.05, bounced nicely to 1.0530. Syrian tensions kept oil prices high.
- AUD/USD, which enjoyed the not-so-dovish RBA statement, fell from the highs of 0.9050.
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 strengthGet the 5 most predictable currency pairs