ISM Manufacturing PMI Preview: USD has room to gain ground but for the wrong reasons
|The ISM Manufacturing PMI is set to marginally edge higher in September. Low bar for upside surprise could turn dollar-positive, Yohay Elam, an analyst at FXStreet, reports.
Key quotes
“Economists expect a minor increase in the headline ISM Purchasing Managers' Index, from 56 in August to 56.3 in September. Any score above 50 represents expansion. The more significant figure is the employment component, which serves as a hint toward Friday's jobs report. It is set to show a decline from 46.4 to 45.8, representing a deeper contraction in hiring.”
“An upbeat ISM Manufacturing PMI employment component would compound robust ADP's private-sector jobs report and create an upbeat narrative toward Friday's Non-Farm Payrolls. ADP, America's largest payroll firm, reported an increase of 749,000 positions in September, better than expected.”
“In theory, better figures mean a stronger currency, thus a stronger dollar. The greenback indeed has room to rise – yet for the wrong reason. Another robust Non-Farm Payrolls report could discourage lawmakers from cutting a deal on the next fiscal relief package, thus boosting the dollar in its role as a safe-haven currency.”
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