James Smith, Economist at ING, suggests that after Friday's disappointing payrolls data, the latest ISM Non-manufacturing survey provides the FOMC with another reason to leave policy unchanged in June.

Key Quotes

“After May’s non-farm payrolls plummeted, the ISM Non-manufacturing came crashing back down to 52.9 from 55.7, much lower than expected. Aside from supplier deliveries, the other main components that contribute to the headline recorded fairly sizable falls (employment and business activity), particularly new orders, where the size of the month-on-month drop was the largest since November 2008. This is especially concerning, given that in theory it sets the precedent for (or “leads”) future business activity.

Although the ISM surveys are perhaps not the most central part of the FOMC’s reaction function, the magnitude of the fall means that it will probably feature in the debate over near-term policy. Indeed, given that the US recession story has faded away over recent weeks, it is possible that the combination of today’s weak non-farm payrolls figure and the drop in the ISM Non-manufacturing prompts the debate to resurface to some degree over coming weeks.

Either way, it is another reason for the FOMC to leave rates unchanged in June, with focus now on Chair Yellen’s speech on Monday to see how the latest data will affect policy in coming months.”

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.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD recovers toward 1.1350 on modest dollar weakness

EUR/USD edged higher in the early American session and managed to erase its daily losses. Ahead of Fed Chair Powell's testimony, the pair is closing in on 1.1350. Earlier in the session, the data from the US showed that employment in the private sector rose by 534,000 in April, surpassing the market expectation of 525,000. 

EUR/USD News

GBP/USD extends sideways grind around 1.3300 ahead of Powell's testimony

GBP/USD continues to move sideways around the 1.3300 handle on Wednesday after the data from the US failed to trigger a significant market reaction. The ADP Employment Change arrived at +534K in November, compared to the market expectation of 525,000. FOMC Chairman Powell will testify at 1500 GMT.

GBP/USD News

Gold clings to recovery gains near $1,790

Gold gained traction after dropping below $1,780 in the early European session and climbed toward $1,790. Ahead of FOMC Chairman, the 10-year US Treasury bond yield is up more than 1% on the day, limiting gold's upside for the time being.

Gold News

Altcoins recover as Bitcoin chops

BTC price is consolidating while it tries to move higher, but Ethereum price seems to be enjoying a full-fledged rally as it comes closer to setting up new highs. Ripple price, on the other hand, is struggling to find bullish momentum.

Read more

Cyber Monday 2021 Discounts!

Glued to your trading screen on Cyber Monday? Upgrade your skills by signing up for FXStreet’s Premium service, offered at a discount of up to 50%. Fellow traders have already taken advantage of Black Friday profits. What about you? 

Subscribe now!

Forex MAJORS

Cryptocurrencies

Signatures