USDJPY Rises Despite Slowing US Manufacturing Expansion in July
THE TAKEAWAY: [Markit PMI shows U.S. manufacturing expansion slowed in July] > [Manufacturing slows as global slowdown restrains demand for U.S. goods] > [USDJPY strengthens]
U.S. manufacturing activity expanded in July at its slowest pace in 19 months, with a report released today by the London-based Markit group showing that its Markit Economics index of U.S. manufacturing fell to 51.4 in July from 52.5 in June. A reading above 50 in the purchasing managers’ measure indicates expansion. Economists surveyed by Bloomberg News had expected the final reading for July to remain unchanged from its initial reading of 51.8.
The manufacturing industry appears to be stagnating as a slowdown in global economic activity continues to dampen demand for American exports and weaken business conditions in the U.S. At the same time, American consumers are curbing their spending and businesses are holding off on purchasing equipment.
The Institute for Supply Management (ISM) will publish its own manufacturing survey later this morning. Last month the ISM reported an unexpected contraction in manufacturing activity, following 33 consecutive months of expansion. Economists are expecting the ISM survey to show stagnated activity in July.
USDJPY 1-minute Chart: August 1, 2012
Chart created using Market Scope – Prepared by Tzu-Wen Chen
In the minutes after release of the Markit survey results, the U.S. dollar rose slightly against the yen, extending earlier gains following better-than-forecast ADP employment data. At this time this report was written, the USDJPY was trading higher at 78.20 yen.
--- Written by Tzu-Wen Chen, DailyFX Research
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