BREAKING: USD weakens after weak PMI data

• The S&P Global US Manufacturing PMI fell to 47.6 in November  from 50.4 in October, well below market forecasts of 50.0 flash estimates showed. The reading pointed to the first contraction in factory activity since the pandemic hit in mid-2020. There was a renewed fall in output and a sharper decline in new orders as demand conditions were stymied by inflation and economic uncertainty. On the other hand, firms signalled the first improvement in supplier performance since October 2019. Faster lead times were, however, often linked to reduced demand for inputs. Moreover, purchasing activity fell at the sharpest pace since May 2020 as firms reportedly worked through excess inventories.
• The S&P Global US Services PMI dropped to 46.10 in November  from 47.8 in the previous month, below analysts' estimates of 47.8, a preliminary estimate showed. The reading pointed to the second-fastest rate of contraction in the service sector, excluding the initial pandemic phase in the first half of 2020, as high inflation and rising interest rates hit demand. New business dropped the most since May 2020 and employment rose only marginally, while backlogs of work and capacity pressure were down. On the price front, input cost inflation was the softest in almost two years and output price inflation was the lowest since October 2020. Nonetheless, firms remained upbeat in their expectations for activity over the next year, amid hopes of further easing in price pressures and investment in service lines.

Dollar weakened and US equities moved higher following publications of both reports, as weaker data support hopes that FED will ease the pace of interest rates increases.

US Manufacturing & Services surveys fell sharply in November, pointing to a weakening US economy. Source: Bloomberg

EURUSD is trading higher today and today’s data provided more fuel for bulls. The main currency pair is currently testing a short-term resistance zone in the 1.0360 area. Source: xStation