Bullish PMI Not Enough to Spur US Dollar Rally
- US Manufacturing Purchasing Managers’ Index rose to 54.5 compared to 53.1 previously; estimated 53.4
- US Services PMI came in at 55.9 also beating the expected 55.2 figure
- The US Dollar remains steady at 93.88
Slightly Beat in Manufacturing and Services
IHS Markit’s October preliminary PMI prints came in slightly above market expectations for October. The “flash” prints for manufacturing, services, and composite came in at 54.5, 55.9, and 55.7 respectively. In HIS Markit’s press release, manufacturing saw the strongest upturn since January. As for the services sector, the lastest reading in the services sector signaled the second-fastest rate of expansion since November 2015. IHS Markit further commented, “there were also positive developments in terms ofstaff hiring and business optimism during October,suggesting that private sector firms are gearing upfor sustained growth in coming months.”
IHS Markit Purchasing Managers’ Index
The Purchasing Managers’ Index (PMI), reported by IHS Markit, reflects business conditions in various sectors of the United States economy. The report is comprised of three surveys which include manufacturing, services, and composite PMI. The manufacturing and services sector each contribute to a large portion of gross domestic product so the surveys are an important indicator of the economy’s current condition. Composite PMI reflects responses from business executives in the private manufacturing and services sectors. Responses are weighted based on the size of the company reflecting either an improvement, deterioration or no change in business activity. A print above 50 is a bullish signal for the US Dollar. Conversely, a reading below 50 is considered a bearish signal for the currency.
Following the releases of the PMI data, CME Group’s FedWatch Tool sees a near 100% chance of a rate hike at the December Federal Open Market Committee meeting in December. Conversely, next week’s FOMC meeting is not expected to result in a rate hike.
Below is a list of economic releases that has driven the US Dollar higher:
- USD Markit US Manufacturing PMI (OCT P): 54.5 versus 53.4 expected, from 53.1
- USD Markit US Services PMI (OCT P): 55.9 versus 55.1 expected, from 55.3 previous
- USD Markit US Composite PMI (OCT P): 55.7 from 54.8 previous
Chart: DXY Index 15-minute Chart (October 24, 2017 Intraday)
Flash PMI did not garner much attention from the US Dollar. At the time that the data was released the US Dollar Index, DXY, traded within a narrow range around 93.88. At the time that this was written DXY traded at 93.86.
--- Written by Dylan Jusino, DailyFX Research
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.