Talking Points
- EURUSD clawed back some of Tuesday’s losses after weaker-than-expected manufacturing and services data.
- Expectations were high after recent USD-bullish Philly Fed and Empire survey releases.
- See the DailyFX Economic Calendar and see what live coverage for key event risk impacting FX markets is scheduled for next week on the DailyFX Webinar Calendar.
The first look at Markit’s February manufacturing, services and composite PMI’s missed expectations, and fell below January’s levels, prompting a sell-off in the US Dollar. The manufacturing PMI of 54.3 missed expectations of 55.2 while the services PMI slumped nearly 2 points at 53.9 against expectations of 55.8.
According to data provider Markit, the "latest survey data indicated that business optimism moderated among U.S. private sector firms in February," while "manufacturers signalled that input cost inflation was at its highest level since September 2014."
Going into the figures, the market had been looking for a strong read after the economic strength seen in the recent Philly Fed and Empire numbers. The February manufacturing business outlook survey from the Federal Reserve Bank of Philadelphia jumped to 43.3 from 23.6 with 48% of firm’s surveyed reporting increased activity compared to 40% in January. Last week’s New York Empire State Manufacturing Index also beat all expectations on the upside, soaring to 18.7 in February, from a prior 6.5, and its highest level since September 2014.
With expectations high, any miss was always likely to hurt the USD, especially after FOMC chair Janet Yellen’s recent hawkish testimony. EURUSD jumped from 1.05250 to 1.05500 on the figures release before settling back mid-range.
Chart: EURUSD 5-Minute Timeframe (February 21, 2017).
--- Written by Nick Cawley, Analyst
To contact Nick, email him at Nicholas.cawley@ig.com
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