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Markit Manufacturing PMI Talking Points:

  • The U.S. Markit Manufacturing PMI reading came in at 50.1 for June and marks a 117-month low for the sector amid continued fragility
  • The weak trend continues in services and manufacturing with both numbers printing below analyst expectations
  • The US Dollar Index (DXY) is little changed on balance as better-than-expected existing home sales data offsets the manufacturing PMI miss
  • US Treasury yields remain subdued as the US economy approach a crossroad of mixed economic data and an increasingly dovish Fed

Markit Economics released their monthly Purchasing Managers Index readings this morning which revealed continued weakness in the services and manufacturing sectors. Compared to the prior print of 50.5, June’s manufacturing PMI fell to 50.1 and registered a remarkable 117-month low. The services sector also showed weakness with the index hitting 50.6, down from 50.9 in May.

The data comes at a pivotal point for the US as it relates to monetary policy seeing that the Federal Reserve’s Board of Governors shifted to a more dovish stance in light of a slowing US economy earlier this week. Powell stressed during this week’s press conference that they will be keeping a close eye on economic data considering muted inflation pressures. In turn, US bonds saw strong buying with the US 10-Year yield falling briefly under 2 percent overnight. Contrasting the weak PMI data this morning was an US existing home sales which crossed the wires at 5.34 million and beat expectations along with an upward revision to the prior month reading of 5.21 million.

US Dollar Index (DXY) and 10-Year Treasury Note Yield (TNX) - 15 Min Time Frame

DXY

Markit’s Chief Economist noted that prices for goods and services rose at an increased rate for June due primarily to tariffs with two-thirds of manufactures citing tariffs as the reason for higher prices on their raw material costs. Also, survey respondents showed that clients are becoming somewhat averse to risk, mainly due to less than favorable economic conditions in the US.

--Written by Thomas Westwater, Intern Analyst for DailyFX.com

Contact and follow Thomas on Twitter @FxWestwater

DailyFX forecasts on a variety of currencies such as the US Dollar or the Euro are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.