US Manufacturing PMI July Preview: Verification of dollar decline
Manufacturing PMI is forecast to rise to 54.0 in July while new orders and employment indexes are predicted to fall. If PMI is hard-pressed to remain positive, the weakening US economy and dollar could be confirmed, Joseph Trevisani, an analyst at FXStreet, reports.
Key quotes
“The purchasing managers’ index from the Institute for Supply Management is forecast to climb to 54 in July from 52.6 in June. The new orders index is predicted to fall sharply to 46.8 from June’s surprise jump to 56.4. Employment is also forecast to reverse gains dropping to 34.4 in July from 42.1 in June. Prices are projected to rise to 52 in July from 51.3.”
“The PMI numbers point directly at the July non-farm payrolls on August 7. If the deterioration in outlook and especially in employment is steeper than expected the implications for the economy in the third quarter might be considerable. Instead of the spending of returning workers fueling consumption and more hiring the reverse could begin – rising unemployment again cutting into consumer purchases leading to another round of firings.”
“The dollar’s July swoon was based on just such a scenario and the Fed’s likely response. If the PMI figures confirm economic weakness Friday’s profit-taking bounce in the dollar might become an opportunity to reestablish those dollar short positions.”
Author
FXStreet Team
FXStreet
