Business activity in the US private sector expanded at a softening pace in early August, with S&P Global Composite PMI falling to 50.4 from 52 in July. This reading came in worse than the market expectation of 52.
S&P Global Manufacturing PMI dropped to 47 from 49 in the same period while the Services PMI edged lower to 51 from 52.4.
Commenting on the survey's findings, “a near-stalling of business activity in August raises doubts over the strength of US economic growth in the third quarter," said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.
"The survey shows that the service sector-led acceleration of growth in the second quarter has faded, accompanied by a further fall in factory output," Williamson added and noted that rising wage pressures as well as increased energy prices have pushed input cost inflation higher.
Market reaction
The US Dollar came under renewed bearish pressure and erased its daily gains after the PMI data. As of writing, the US Dollar Index, which touched its highest level since early June at 103.98 earlier in the day, was virtually unchanged at 103.64.
US Dollar price today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Rows.
USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
USD | 0.08% | 0.54% | 0.25% | -0.29% | -0.63% | -0.29% | -0.22% | |
EUR | -0.08% | 0.46% | 0.18% | -0.38% | -0.71% | -0.37% | -0.31% | |
GBP | -0.54% | -0.45% | -0.30% | -0.84% | -1.18% | -0.84% | -0.76% | |
CAD | -0.25% | -0.16% | 0.29% | -0.53% | -0.89% | -0.53% | -0.45% | |
AUD | 0.26% | 0.38% | 0.82% | 0.54% | -0.33% | 0.00% | 0.07% | |
JPY | 0.67% | 0.69% | 1.14% | 0.89% | 0.37% | 0.32% | 0.40% | |
NZD | 0.29% | 0.37% | 0.83% | 0.53% | -0.01% | -0.34% | 0.13% | |
CHF | 0.23% | 0.31% | 0.77% | 0.47% | -0.07% | -0.41% | -0.06% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
This section below was published as a preview of the US PMI reports at 08:00 GMT.
- August S&P Global Preliminary Manufacturing PMI to improve, Services PMI to stabilize.
- Any deviation from expectations in the US PMI data could impact the US Dollar and the Fed policy outlook.
- EUR/USD trades below 1.0900 ahead of the US PMI release, Jackson Hole Symposium.
Business activity in the United States (US) private sector, as measured by the S&P Global Purchasing Managers Index (PMI) through a monthly survey, will see the release of the August preliminary estimates of Manufacturing PMI and Services PMI on Wednesday.
Heading into the US PMI showdown for August, markets widely expect the US Federal Reserve (Fed) to hold rates next month but remain wary about the future policy path amid increased bets that the Fed will stick with higher rates for a longer period.
In its July survey, S&P Global said its preliminary US Manufacturing PMI rose for the first time in three months to 49.0 from a drop to a 46.3 reading seen in June. The Services PMI Index, however, fell to 52.0 in July when compared to June’s 53.2. The PMI readings suggested that the US economy grew at a slower pace at the beginning of the third quarter.
Commenting on the July survey findings, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said that ”there were several other encouraging bright spots in the survey, most notably including a marked improvement in business expectations for output in the year ahead. Firms are therefore anticipating the current soft patch to soon pass, and importantly are hiring more staff as a result.
“There was also good news on the inflation front. The combination of weak demand and improved supply led to a further “buyers’ market” for many goods. Prices charged for goods consequently barely rose for a third straight month, which should help subdue consumer price inflation in the near term,” Williamson added.
What to expect in the next S&P Global PMI report?
For August, the S&P Global Manufacturing PMI Index is likely to improve further to 49.3. The Services PMI, however, is expected to drop to 52.2 in the reported month, compared with July’s 52.3 print. The Composite PMI is seen unchanged at 52.0 in August.
Analysts at BBH Markets noted, “key August PMI readings will be reported. S&P Global reports preliminary PMIs Wednesday. Manufacturing is expected to remain steady at 49.0, services is expected to fall three ticks to 52.0, and the composite is expected to fall half a point to 51.5. If so, this composite would be the lowest since February.”
When will August flash US S&P Global PMIs be released and how could it affect EUR/USD?
The S&P Global PMI report is slated for release at 13:45 GMT on August 23. The US Dollar is on a corrective move lower from two-month highs against its major counterparts, awaiting the US data for a fresh directional impetus. Meanwhile, the EUR/USD pair is reversing recovery gains below the 1.0850 level.
If the US PMI report surprises positively across the indicators, it will help strengthen the narrative of elevated rates for longer, pushing back against expectations of Fed rate cuts in early 2024. Markets are pricing roughly 25% probability of one more rate hike by the Fed in the final quarter of this year. Encouraging US data could add to the signs of economic resilience, providing a fresh leg up in the US Dollar. EUR/USD could come under renewed selling pressure, testing the 1.0800 demand area yet again.
In case the US business activity disappoints, the US Dollar could extend its correction, as the potential slowdown may justify the Fed pause. Federal Reserve policymakers would appreciate cooling economic activity, as it would help soften inflation further. Although fears of ‘hard-landing’ could keep the downside capped in the safe-haven US Dollar.
Meanwhile, Dhwani Mehta, Asian Session Lead Analyst at FXStreet, offers a brief technical outlook for the EUR/USD pair and writes: “The main currency pair has been ranging between flattish 100-Day Moving Average (DMA) and bullish 200 DMA since mid-August. Will the US data help EUR/USD yield a range breakout? Given that the 14-day Relative Strength Index (RSI) holds below the midline, downside risks remain intact for the pair.”
Dhwani also outlines important technical levels to trade the EUR/USD pair: “100 DMA at 1.0928 aligns at the strong resistance, above which the bearish 21 DMA at 1.0950 will be challenged. Further up, Euro bulls will target the horizontal 50 DMA at 1.0982. Alternatively, immediate support awaits at the 1.0800 round figure, where the 200 DMA emerges. Acceptance below the latter could trigger a fresh downtrend toward the June 12 low of 1.0733.”
Economic Indicator
United States S&P Global Manufacturing PMI
The Manufacturing Purchasing Managers Index (PMI) released by the S&P Global captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the manufacturing PMI is an important indicator of business conditions and the overall economic condition in the United States. Readings above 50 imply the economy is expanding, making investors understood it as a bullish for the USD, whereas a result below 50 points for an economic contraction, and weighs negatively on the currency.
Read more.
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.
Recommended content
Editors’ Picks
EUR/USD resumes slide below 1.0500
EUR/USD gained modest upward traction ahead of Wall Street's opening but resumed its slide afterwards. The pair is under pressure in the American session and poised to close the week with losses near its weekly low at 1.0452.
GBP/USD nears 1.2600 as the US Dollar regains its poise
Disappointing macroeconomic data releases from the UK put pressure on the British Pound, yet financial markets are all about the US Dollar ahead of the weekly close. Demand for the Greenback increased in the American session, pushing GBP/USD towards 1.2600.
Gold pierces $2,660, upside remains capped
Gold (XAU/USD) puts pressure on daily lows and trades below $2,660 on Friday’s early American session. The US Dollar (USD) reclaims its leadership ahead of the weekly close, helped by rising US Treasury yields.
Broadcom is the newest trillion-dollar company Premium
Broadcom (AVGO) stock surged more than 21% on Friday morning after management estimated on Thursday’s earnings call that the market for customized AI accelerators might reach $90 billion in fiscal year 2027.
Can markets keep conquering record highs?
Equity markets are charging to new record highs, with the S&P 500 up 28% year-to-date and the NASDAQ Composite crossing the key 20,000 mark, up 34% this year. The rally is underpinned by a potent mix of drivers.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.