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The ISM Non-Manufacturing PMI for August leaped to a score of 58.6 points, indicating strong growth in America’s biggest sector. It was expected to slide to 55.2 from 56 points. This is the last and probably most important hint towards the all-important Non-Farm Payrolls report tomorrow – the NFP that could cement QE tapering on September 18th.

EUR/USD traded lower at 1.3165, GBP/USD was around 1.5625 and USD/JPY around 99.80. The dollar is on the rise, with some round levels broken– updates coming.

Data

  • The employment component rose to 57 points – 3.8 more than July’s 53.2. This raises expectations for the NFP.
  • The forward looking new orders component climbed over 60 and reached 60.5 points, from 57.7 beforehand.
  • Prices fell from a high of 60.1 to 53.4 points.
  • Here is a quote from the report: “The majority of respondents’ comments continue to be mostly positive about business conditions and the direction of the overall economy”
  • Factory orders fell by 2.4%, better than a drop of 3.4% that was expected.

Currency Reaction

  • EUR/USD resumed its falls and is now trading at 1.3140. It was earlier hit by Draghi. He sees the recovery as “green”.
  • GBP/USD loses the 1.56 line, after fighting hard to conquer it. The BOE made no policy change.
  • USD/JPY climbed above 100 for the second time. This time, it might hold well. The BOJ also refrained from policy changes.
  • AUD/USD is at 0.9136. It climbed nicely until it reached downtrend resistance.
  • USD/CAD is holding below 1.05 so far. It’s important to note that also Canada releases employment data tomorrow.

Earlier, jobless claims dropped to 323K, better than 330K expected and lower than 332K in the previous week. Unemployment claims remain low and solid. Also continuing claims held below the 3 million mark.

ADP Non-Farm Payrolls came out at 176K, within expectations. In addition, the figure for July was only revised 2K lower to 198K. The ISM Manufacturing PMI came out with a strong figure of 55.7 points, but the employment component dropped a bit.

All in all, we have a list of solid releases towards the NFP, that all point to an OK report – enough for the Federal Reserve to begin tapering in its critical meeting on September 18th.

See how to trade the Non-Farm Payrolls with EUR/USD.

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