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Dollar Unfazed by Highest Non-Manufacturing Reading Since 2005

Dollar Unfazed by Highest Non-Manufacturing Reading Since 2005

Dylan Jusino, Contributor


Talking Points:

- ISM non-manufacturing Index hit the highest reading since August 2005 at 59.9 in January, beating the 56.7 forecast

- Business activity, new orders, employment, and price subcomponents rose as well

- The US Dollar Index traded slightly lower following today’s ISM report

- See the DailyFX Economic Calendar for upcoming economic data and for a schedule of live coverage see the DailyFX Webinar Calendar.

See the newly updated fourth quarter forecasts for the US Dollar, Euro, British Pound and more the DailyFX Trading Guides page.

TheInstitute for Supply Management (ISM) non-manufacturing survey came in 3.9% higher than the seasonally adjusted December reading at 59.9% in January. This demonstrates that there is continued growth in the services sector at a faster rate. Additionally, the Non-Manufacturing Business Activity Index rose to 59.8%, which marks a 2%gain over the seasonally adjusted December figure of 57.8%. This reflects growth for the 102nd consecutive month. Also on the rise were that New Orders Index coming in at 62.7% (8.2% higher than the previous reading) and the Employment Index at 61.6% (5.3% higher than the previous reading). The Price Index rose as well by 2% over the previous month at 61.9% marking the 23rd consecutive month of growth. The Non-manufacturing Index (NMI) reported 15 industries grew in January. Here are some of what respondents are saying in different service industries from the ISM report:

  • "Executive management [is] excited about tax breaks for CapEx purchases in [the] new tax bill." (Information)
  • "Month-over-month steady growth, on average, [is] 3 percent on project volume and 1 percent on total revenue." (Construction)
  • "Signs of strong growth [in] financial performance expectations given the recent tax changes." (Finance & Insurance)

See the full non-manufacturing and manufacturing survey results below:

Source: January 2018 Non-Manufacturing ISM

Below is a list of economic releases that has driven the US Dollar slightly lower:

- USD Markit US Services PMI (JAN F): 53.3K in line with expectations and previous

- USD Markit US Composite PMI (JAN F): 53.8 in line with previous

- USD ISM Non-Manufacturing/Services Composite (JAN): 59.9 versus 56.7 expected, from 56.0 (revised higher from 55.9 previous)

See the DailyFX economic calendar for Monday, February 5, 2018

Chart 1: DXY Index 15-minute Chart (January 31 - February 5, 2018)

The US Dollar Index traded narrowly over the weekend. This morning DXY rose steadily but appears to have reached an intraday high at 89.61. Despite the strong non-manufacturing report, DXY traded slightly off of that high at 89.47 when this was written.

--- Written by Dylan Jusino, DailyFX Research

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