Jun 02 2008
ISM Manufacturing On Tap
A batch of disappointing economic data left the greenback in bearish territory on Friday to end what had been a positive week for the USD. Amidst an already shaky US economic outlook, personal consumer spending indices showed a slowdown in April as both income and spending numbers came in at 0.2%. The drop in consumption numbers left some investors worried that the US is a long way from the recovery that has been mentioned for the last month or so. Combined with rising food and oil prices, and the abysmal housing market, a poor showing from the University of Michigan Consumer Sentiment report, listed at its lowest mark in 28 years resulted in a correction of the weeks bullish dollar trend.
The USD spent the early part of the week recovering versus a batch of its major currency rivals, most notably the EUR. The EUR/USD pair spent most of the week in a bearish trend of just under 400 pips, until Friday as the pair re-adjusted to close the week at 1.5557. Friday’s hefty US news day was the major factor in the 84 pip rise in the EUR/USD. Along with Personal Spending and Consumption indices and the Michigan Consumer Sentiment report discussed earlier, we also saw Core PCE Price Index and Chicago PMI. Both provided little to turn around bearish results. Looking ahead to this week, an array of US data on tap should prove to be essential to dollar movement. The news week will be highlighted by ADP Nonfarm Employment Change, ISM Non-Manufacturing Composite, Unemployment Claims and a busy Friday which will include Nonfarm Employment Change and the Unemployment Rate. Friday will likely be the main contributor to USD volatility, as historically Non Farm Payrolls is one of the more volatile events on the news calendar. The mark is expected to show a falling trend for the fifth consecutive month. We will also hear twice from Fed Chairman Ben Bernanke, who is expected to address the delicate US economic situation.
On tap for today, we expect the release of ISM Non-Manufacturing Prices and Index. The indices are not expected to vary much from last month’s marks, which should turn investor attention to outside news events. Still expect steady liquidity in and around the 14:00 GMT release of the ISM figures.
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