THE TAKEAWAY: USD ISM Manufacturing (JUN) > 50.9 versus 50.5 expected, from 49.0 > USDJPY NEUTRAL

The Institute of Supply Management released its monthly manufacturing survey today and showed a 50.9 reading, slightly above the Bloomberg News survey expected 50.5. Importantly, this 50.9 reading indicates a slight expansion because it is above the 50.0 level. This reading is also above May’s 49.0 print, which was the worst figure since June 2009.

There are several components of the ISM Manufacturing report that are often inspected. One is the employment component, which contracted to 48.7 from May’s 50.1. Some investors will use ISM data as a precursor to Friday’s NFP data and a contraction in the ISM employment component in theory forecasts poorly for NFP numbers. However recall that almost 70% of the US economy is reliant upon consumption spending, not manufacturing, so investors should be prudent while reading into today’s data. Meanwhile, the prices-paid index expanded to 52.5 from May’s 49.5. This is positive news in the sense that prices are moderately reflating.

USDJPY 1-minute Chart: July 1, 2013

US_Prints_Mixed_ISM_Manufacturing_Data_body_Picture_1.png, US Prints Mixed ISM Manufacturing Data

Charts Created using Marketscopeprepared by Kevin Jin

Market reaction to the ISM report was just as mixed as the data suggests. After an initial 10 pip spike past ¥99.80, the USDJPY quickly retreated back to 99.70, where it was before data was released. The pair is mostly trading within a 10 pip range between 99.70 and 99.80 at the time of writing. Also note that the USDJPY is approaching the important 100.00 level and today’s mixed ISM data was not enough to push the pair past that level as of yet.

--- Written by Kevin Jin, DailyFX Research