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Eyes Turn To Fed, NFPs As ISM Manufacturing Continues Expansion

Eyes Turn To Fed, NFPs As ISM Manufacturing Continues Expansion

Omar Habib, Contributor

Talking Points:

- October US ISM Manufacturing comes in stronger than expected.

- ISM gain largely driven by strength in employment component.

- US Dollar largely unchanged on the news.

The US ISM Manufacturing survey for October beat expectations, coming in at 51.9 versus expectations of 51.7, beating last month’s reading of 51.5. The strength in ISM was largely driven by the employment component, which jumped from 49.7 last month to 52.9.

Since the beginning of 2014, ISM Manufacturing has signaled contraction only six times, five of which were consecutive in the end of 2015 into the beginning of 2016. This should factor into Atlanta Fed’s GDPNow, currently standing at a respectable +2.7% annualized for Q4’16.

While this report did not prove significant enough to move the US Dollar, tomorrow’s FOMC meeting, Thursday’s US ISM Services/Non-Manufacturing Index and Friday’s US Non-Farm Payrolls reports should give traders better market-moving opportunities. Although no change in policy is expected at this November Fed meeting (Fed funds futures are only pricing in a 7% chance of a hike), markets will likely receive clarification on when the Fed will next hike rates. Currently, according to Fed funds futures, there is an 82% chance of a rate hike in December.

See the DailyFX economic calendar for Tuesday, November 1, 2016

Chart 1: USD/JPY 1-minute Chart: November 1, 2016 (Intraday)

Markets did not react significantly to the report, as the US Dollar was largely unchanged against most of the major currencies covered by DailyFX Research. By the time this report was written, the USD/JPY was slightly lower at ¥104.75 versus ¥104.81 ahead of the report.

Read more: AUD/USD Consolidation Requires Patience; Watch Oil Next Few Days

--- Written by Omar Habib, DailyFX Research

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.