ISM Manufacturing PMI in contraction, but employment is positive

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Significant weakness in the US manufacturing sector: it is now in contraction, with a score of 48.6 points, below the 50 point threshold. Prices dropped to 35.5 points, worse than expected. New orders also dropped to contraction with 48.9 points. However, there is a silver lining: the employment component rose from 47.6 to 51.3 points, showing expansion. This is good news for the NFP on Friday.

The US dollar is weaker in the immediate aftermath, with EUR/USD testing resistance at 1.0630. This doesn’t go too far though.

The ISM Manufacturing PMI was expected to tick up to 50.6 points, escaping the verge of contraction seen in October, which saw 50.1 points. This figure and the employment component serve as hints towards the Non-Farm Payrolls on Friday.

The US dollar has been on the back foot today.

Before the release, EUR/USD traded at 1.0613, GBP/USD at 1.5070, USD/JPY at 123.10, USD/CAD at 1.3350, AUD/USD at 0.73 and NZD/USD at 0.6650.

Earlier, Markit’s manufacturing PMI was upgraded from 52.6 to 52.8.

The 50 point mark separates growth and contraction. At the same time, the US also published Construction Spending. This advanced by 1%, better than 0.6% expected.

Later in the day we have speeches from FOMC member Charles Evans and then Lael Brainard. Both are doves.

This is a very busy week with the biggest event being the ECB decision.

ECB December Decision – All the Updates

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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 the 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.

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