US Dollar, Equities Unfazed by ISM Manufacturing Miss
- The ISM manufacturing figure was 58.1 versus an expected 59.4
- ISM employment surpassed last month’s reading of 56 at 56.5
- The dollar was little changed on the report, likely awaiting today’s FOMC decision
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US ISM Manufacturing Reaches Four Month Low
The ISM manufacturing survey has had significant market moving effects in the past but despite today’s miss, the survey did little to move the US Dollar. Manufacturing figures were slightly lowered than forecasted, coming in at 58.1 versus 59.4. Last month’s reading was 60.2. July’s reading marks the lowest in the last four months and was hampered by shortages of skilled labor, higher costs for raw materials and difficulty getting enough transportation.
New-orders slid 3.3 points to 60.2 and production fell slightly to 58.5. Together, the declines were enough to contribute to the loss seen in the overall composite. Although the survey results disappointed, any reading above 55 is considered “strong growth” and anything above 50, “growth.”
The data comes on the back of Tuesday’s release of consumer confidence, another important economic indicator. Together, it could be argued the indicators show signs that gradual economic slowing is on the horizon. The mention of raw material cost in this month’s manufacturing survey will likely persist should steel and aluminum tariffs remain in place and could increase if trade wars spread. Despite this, an alleviation on any one of the limiting factors could help relieve some downward pressure in the sector.
Read A Brief History of Trade Wars for insight on how the conflicts may develop.
US Dollar Awaits Fed Rate Decision
The dollar was largely unaffected by the data release as market participants look to the FOMC decision later Wednesday to drive price action. Following the Fed’s decision, Thursday is a busy day for the pound as the Bank of England also faces a rate decision. The events are available on our economic calendar, updated immediately upon each data release.
US Dollar Basket Price Chart (DXY): 5-Minute Time Frame, August 1 (Chart 1)
S&P 500 Price Chart: 10-Minute Time Frame August 1 (Chart 2)
--Written by Peter Hanks, Junior Analyst for DailyFX.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.