Article / 01 September 2016 at 23:14 GMT

US Market Wrap: US dollar hit by ISM manufacturing contraction

FX Trade Strategist /

Nothing of note

US data released
  • Challenger job cuts August (Actual 32,188 vs previous 45,346)
  • Jobless claims (263,000 vs forecast 265,000)
  • ISM Manufacturing PMI August (Actual 49.4 vs forecast 52.0)
  • Markit Manufacturing PMI August (Actual 52.0 vs forecast 52.1)
The FX universe was unfolding as it should when New York started the day. The US dollar was strengthening against the majors on anticipation of strong US data reinforcing the case for a US Federal Reserve rate hike, although Sterling was an anomaly. Better than expected Markit PMI data sent GBPUSD soaring. In hindsight, that may have been an omen.

Initially, the US data releases, (Challenger job cuts and Jobless Claims) were seen as positives and provided a bit of support for the US dollar. Then things got nasty. The ISM Manufacturing PMI didn’t just miss, it dropped into “contraction” territory (under 50).

The US dollar tanked. EURUSD leapt to 1.1205 from 1.1128 while USDJPY dropped to 103.11 from 104.00. The dollar ended the session in the red against the G10 currencies.

It is rather interesting to note that the Markit Manufacturing PMI data for the UK is considered valid enough to trigger a massive GBPUSD rally, but the US Markit PMI data is totally ignored by traders.

Oil prices declined for the fourth day in a row and even today’s US dollar retreat wasn’t enough to provide much support. WTI opened in New York at $44.70 and dropped to $43.00 by mid-afternoon before drifting higher into the close. This week's reports of rising crude inventories in the US and scepticism around talk of an Opec agreement in Algiers is behind the move.

US equity traders didn’t appear to be concerned with either the drop in crude prices or the weak ISM PMI data. In fact, they just didn’t seem to care ahead of Friday’s non-farm payrolls report.


Russia has not quite avoided the "August curse" according to TradingFloor contributor Nadia Kazanova in: August curse hits Russia's political credibility

 US equity traders didn’t appear to be concerned with the weak ISM PMI data.  Photo: iStock

– Edited by Susan McDonald

Michael O'Neill is an FX consultant at IFXA Ltd. Follow Mike or post your comment below to
engage with Saxo Bank's social trading platform.

Missed a day? Here’s what we had to say during our Asian session and our regular European Morning Markets, From the Floor and Mid-session Europe.


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer
- 沪ICP备13028953号-1

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail