If you like trading the news, you might want to take a look at the U.S. ISM non-manufacturing PMI release and how it could affect EUR/USD. I have some tips and tricks for y'all right here!

What is the ISM non-manufacturing PMI all about?

First up, let me tell you what those two acronyms mean. ISM stands for Institute of Supply Management, which is the agency responsible for measuring the Purchasing Managers' Index or PMI for both the manufacturing and non-manufacturing industries in the United States.

The non-manufacturing PMI takes into account the business conditions in the services sector, such as employment, production, new orders, prices, and inventories, to determine whether the industry expanded or contracted during the month. A reading above 50.0 indicates industry expansion while a reading below 50.0 reflects a contraction.

Since the non-manufacturing PMI shows how the services sector fared during a period, it is generally considered a leading indicator of economic growth, along with the manufacturing PMI.

How did the previous releases turn out?

Did you know that the U.S. non-manufacturing PMI has been above the 50.0 mark since December 2009? That means the services sector has been expanding for the past three years!

Of course the pace of expansion varies from month to month, as the index has seen its share of worse than expected results. But after dipping from 53.1 to 52.7 in June, the non-manufacturing PMI has been on a tear as it kept climbing over the past few months.

For September, the index landed at 55.1, higher than the estimated 53.7 reading. Note that the actual figure has been beating expectations for the past three months as well.

How could EUR/USD react?

Better than expected actual results usually trigger EUR/USD rallies while weaker than expected results typically result in a EUR/USD selloff right after the report is released. The rally usually lasts anywhere between 50 to 70 pips, as you can see from the charts below.

1

During the ISM non-manufacturing release on September 6, 2012, EUR/USD rallied from the 1.2580 area until close to the 1.2650 minor psychological resistance. At that time, the actual PMI came in better than consensus as it showed a 53.7 reading instead of 52.6.

2

The October release showed more or less the same price pattern as EUR/USD rallied from a low of 1.2875 until the 1.2925 mark, before consolidating around 1.2900 for the rest of the U.S. session. At that time, the ISM non-manufacturing PMI also beat the consensus which was at 53.7 and came in at 55.1.

Note, however, that both September and October releases of the U.S. ISM non-manufacturing PMI were preceded by the ADP non-farm employment change report. In both instances, the ADP figure came in stronger than expected and triggered a Greenback rally, setting the stage for EUR/USD to bounce right back up after the strong PMI release.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Education feed

Editors’ Picks

EUR/USD hovers around 1.1900, retains weekly gains

The EUR/USD pair trades around the 1.19 mark after the Eurozone Q2 Prelim GDP beat estimates with 2% while US PCE inflation rose by less than anticipated in June, printing at 3.5% YoY. Risk-on mood persists.

EUR/USD News

GBP/USD retreats after flirting with 1.4000

GBP/USD retreated from near the 1.4000 level, but the greenback remains away from investors' radar. Optimism over the Brexit issue and the declining trend in new COVID-19 cases in the UK offers support to the pound.

GBP/USD News

USD/JPY clings to modest gains near 110.60, eyes on US data

USD/JPY edges slightly higher following Thursday's sharp decline. US Dollar Index consolidates weekly losses, stays below 92.00. Investors await inflation and consumer sentiment data from US.

USD/JPY News

Editors’ Picks

EUR/USD hovers around 1.1900, retains weekly gains

The EUR/USD pair trades around the 1.19 mark after the Eurozone Q2 Prelim GDP beat estimates with 2% while US PCE inflation rose by less than anticipated in June, printing at 3.5% YoY. Risk-on mood persists.

EUR/USD News

GBP/USD retreats after flirting with 1.4000

GBP/USD retreated from near the 1.4000 level, but the greenback remains away from investors' radar. Optimism over the Brexit issue and the declining trend in new COVID-19 cases in the UK offers support to the pound.

GBP/USD News

XAU/USD slides to $1,820 area, downside seems limited

Gold traded with a mild negative bias around the $1,825 region, or daily lows, during the early North American session, albeit lacked any follow-through selling.

Gold News

Shiba gets listed on eToro as demand for SHIB skyrockets

Leading investment platform eToro has been adding cryptocurrency assets on popular demand from users. The Dogecoin killer recently amassed 600,000 holders despite range-bound price action. 

Read more

NIO shares rise again as Wall Street shrugs off recent China woes

NYSE:NIO added 1.86% as EV and China stocks bounced back again. Nio rides higher as industry leader Tesla gets some major upgrades. Nio rival XPeng releases a refreshed look for its compact SUV.

Read more

RECOMMENDED LESSONS

7 Ways to Avoid Forex Scams

The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?

What Are the 10 Fatal Mistakes Traders Make

Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.

Strategy

Money Management

Psychology