US Dollar: Solid manufacturing and JOLTs in focus – Danske Bank

Danske Research Team underscores strong United States (US) cyclical signals, with the ISM manufacturing index rising to 55.6 in July, beating expectations and June’s reading. New orders, employment and production all improved, while prices moderated. The team also highlights the June JOLTs report, where higher job openings historically point to rising wage pressures, and notes Fed guidance on inflation and potential rate hikes.

Manufacturing strength and labour signals

"In the US, the ISM manufacturing activity index came in at 55.6 in July, above consensus expectations of 54.0 and up from 53.3 in June. The release followed a similar positive uptick in the PMIs."

"Within the ISM details, new orders and especially employment improved, while the prices index moderated slightly. The production index moved sharply higher to 58.5 from 52.2, marking the strongest reading since November 2021."

"Furthermore, the order-inventory balance continued to improve, indicating a further need for increasing output. The bottom line is that US cyclical data is still looking very solid."

"Today's most interesting data release will be the US June JOLTs report; job openings have shifted moderately higher this year, which has historically predicted rising wage pressures ahead."

"June trade balance data will also be released in the afternoon and the preliminary reading pointed towards a stable trade deficit from May. The Fed's Schmid (non-voter, hawk) will be on the wires overnight."

"The Fed's Williams said he still expects inflation to cool gradually and reach the 2% target on a sustained basis by 2028, assuming energy prices and tariffs have peaked. He described policy as "well positioned" but stressed that the Fed would hike rates if inflation does not slow as expected."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)