USD Breaking News: Uneventful ISM Services Beat Heightens FOMC Expectancy
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U.S. DOLLAR ANALYSIS & TALKING POINTS
- ISM data largely in line with expectations.
- FOMC announcement in focus later today.
DOLLAR FUNDAMENTAL BACKDROP
US ISM services PMI data beat (refer to economic calendar) indicates the services industry remaining in expansionary territory but a few metrics fell short of expectations including:
- The Business Activity Index: -3.4%
- Employment: -0.5%
- Inventory Sentiment: -9.0%
Services grew primarily via an increase in new orders and the easing of supply chain dynamics. That being said, most respondents were optimistic of economic conditions but cited concerns as recessionary discussions gain traction.
The build-up to the PMI print saw the ADP employment change figure surprising markets with yet another robust print. This is in contrast to the JOLTs openings and services employment indicating areas of the labour market are diverging. The weaker employment figure in the ISM report seemed to be the highlight of the release, potentially unwinding the persistent tight US labor market conditions – initial reaction on the Dollar Index (DXY) chart showed a marginal sell-off.
This sets up the upcoming FOMC announcement to be packed with anticipation as the Fed have multiple moving parts to contend with in the midst of a banking crisis and the looming decision around the US debt ceiling.
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US ECONOMIC CALENDAR
Source: DailyFX economic calendar
U.S. DOLLAR INDEX DAILY CHART
Chart prepared by Warren Venketas, IG
The daily DXY chart above remains within the developing symmetrical triangle pattern that is ripe for a breakout depending on the FOMC announcement later today.
- 50-day MA (yellow)
- Triangle resistance
- Triangle support
--- Written byWarren Venketasfor DailyFX.com
Contact and followWarrenon Twitter:@WVenketas
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.