- ISM for Manufacturing was the weakest in 8-months
- FOMC mentions stronger economy in taper decision
- USD/JPY falls to a 2-month low
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The US Dollar fell to a 2-month low against the Japanese Yen on Monday, as the Institute for Supply Management reported its index for manufacturing at an 8-month low in January.
The ISM US Manufacturing survey result was reported at 51.3, severely disappointing expectations for 56.0 and down from a revised 56.5 in December. However, the index result was still reported above 50.0 and therefore indicated expansion in sector activity for the 14th consecutive month. The ISM for Manufacturing for the entire 2013 was reported at 53.9, and manufacturing makes up 12% of the US economy.
Also released today, the ISM Prices Paid index was reported at 60.5 for January, well above expectations for 54.0. US construction spending was reported 0.1% higher in December, beating expectations for unchanged spending amounts from November.
In the Fed’s policy meeting last week, the FOMC unanimously decided to cut monthly asset purchases by another 10 billion US Dollars and mentioned that economic growth has picked up in recent quarters. Therefore, the rate of the taper of the remaining 65 billion dollars of monthly purchases will be largely determined by economic performance, which is why a worse than expected release like today’s ISM manufacturing had a bearish effect on US Dollar trading.
USD/JPY fell 45 pips to 101.30 following the ISM release, and the 100 day moving average, which currently sits at 100.97, may next provide support.
Chart created by Benjamin Spier using Marketscope 2.0
-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to firstname.lastname@example.org .