Summary:
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ISM non-manufacturing PMI: 60.3 vs 59.3 exp
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Prices paid and employment index both drop lower
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Greenback lower on the day as EURUSD back above 1.14
After coming in at its highest level since 1997 last time out, there was plenty of scope for disappointment for the release that followed, but while the ISM non manufacturing PMI dipped back it still topped consensus forecasts. The reading of 60.3 for October was above the 59.3 expected and not that far below the 61.6 2-decade high in September. The final services PMI rose last month and the large divergence seen of late seems to be closing, at least partially.
The ISM non-manufacturing reading pulled back last month but was still better than forecast while the services PMI recovered. Source: XTB Macrobond
Looking at the components of the report there were pullbacks in several of them, but that isn’t too surprising given that the headline declined. Business activity dropped to 62.5 from 65.2 while new orders slid a little to 61.5 from 61.6. The employment index fell to 59.7 from 62.4 but this isn’t too concerning given the strong NFP figures for the labour market for the same month. Prices paid also fell back, to 61.7 from 64.2 and this could be seen as one of the most negative aspects for the US dollar.
The US dollar is coming back under pressure a bit today after Friday’s gains. The Turkish Lira is the biggest winner and higher by more than 1%, but most the G10 currencies are only make small gains against the Buck. Source: xStation
Looking ahead the Midterm elections could have a big impact on the US dollar, with Americans set to go to the ballot box tomorrow. With expectations rising for the Democrats to take a majority in the House of Representatives, there could be some negative news for the buck around the corner. Looking across the pairs the GBPUSD and EURUSD crosses are both possibly forming a bottom and traders may look at the latter more than the former due to the ongoing Brexit uncertainty if wanting to gain some short USD exposure. 1.1300 may now be a double bottom with the low from back in August but longs would like to see price get back above Friday’s peak of 1.1455 before a larger recovery can occur. A break below 1.1300 would negate this setup and pave the way for another push lower.
EURUSD is carving out a possible bottom and if lows around 1.13 continue to hold then a larger recovery is possible. The Midterm elections could also provide some negative news for the greenback and support a move higher in this pair. Source: xStation
