USDJPY Dips as Improvements in US Manufacturing Conditions Slow in July
The U.S. manufacturing sector is showing clear signs of fatigue, with manufacturing conditions improving in July at its slowest pace in 19 months. A slowdown in global economic activity continues to restrain demand for American exports, weakening business conditions in the U.S. A preliminary report released by the London-based Markit group showed that its Markit Economics index of U.S. manufacturing fell to 51.8 in July from June’s final print of 52.5. A reading above 50 in the purchasing managers’ measurement indicates expansion. Economists surveyed by Bloomberg News had expected a flash PMI reading of 52.0 for June.
Total new orders rose at the slowest pace in five months, while new export orders contracted at a faster pace than in June, reflecting deteriorating demand in many overseas markets including the euro zone and China. On the other hand, labor conditions picked up slightly from June, with the employment sub-index rising to 52.9 from 52.8.
USDJPY 1-minute Chart: July 24, 2012
Chart created using Market Scope – Prepared by Tzu-Wen Chen
After initially gaining against the yen immediately after data release, the U.S. dollar took a dive lower to trade below pre-release price levels as investors looked towards the alternative safe haven currency. At the time of this report, the USDJPY pair was trading lower at 78.24 yen.
--- Written by Tzu-Wen Chen, DailyFX Research