Manufacturing activity in the U.S. is expected to contract at a slower pace in April as economists project the ISM index to increase to 38.4 from 36.3 in the previous month, and the data could reinforce an improved outlook for growth as demands pick up however, as the region faces its worst economic downturn in over half a century, economic activity is likely to remain subdued throughout the first half of the year.
Trading the News: U.S. ISM Manufacturing
What’s Expected
Time of release: 05/01/2009 14:00 GMT, 10:00 EST
Primary Pair Impact : EURUSD
Expected: 38.4
Previous: 36.3
Impact the U.S. ISM Manufacturing has had on EURUSD over the last 2 months
March 2009 U.S. ISM Manufacturing
| Manufacturing in the U.S. fell at a slower pace in March as the ISM index increased to 36.3 from 35.8 in the previous month, and the data suggests the downturn in the economy may be reaching a bottom as policymakers take unprecedented steps to steer the region out of a recession. A deeper look at the report showed new orders increased to 41.2 from 33.1 in February, while export demands rose to 39.0 from 37.5, and the employment component rebounded to 28.1 from a record-low of 26.1 in the previous month. Despite the minor improvement in March, economic activity is likely to remain subdued throughout the year as the labor market deteriorates while credit conditions remain far from normal, and conditions may get worse as the U.S. auto industry falters. Moreover, as the downturn in the world economy intensifies, trade conditions are likely to deteriorate further, which reinforces a weakening outlook for growth. | |
February 2009 U.S. ISM Manufacturing
| The ISM report showed that manufacturing in the U.S. contracted for 13 consecutive months in February, but fell at a slower pace from the previous month as the index increased to 35.8 from 35.6 in January. The breakdown of the report showed new orders ticked lower to 33.1 from 33.2, while the employment component slipped to 26.1 from 29.9, which is the lowest since recordkeeping began in1948, and the data continues to foreshadow a deepening recession in the world’s largest economy as the labor market deteriorates at a record pace. As households continue to face falling home prices paired with fading demands for employment, the outlook for private-spending remains weak, and conditions are likely to get worse as firms continue to cut back on production and investment in response to the downturn in global trade. | |
What To Look For Before The Release
Traders with access to market depth information via the FXCM Active Trader Platform may use it to gauge the potency of the economic data release as well as to shed some light on the market’s directional bias. Increasing volume ahead of the announcement will telegraph likely follow-through behind whatever move is to materialize, while an imbalance in available liquidity on the Bid versus the Offer side of the market will tell us the direction major institutions are likely favoring ahead of the announcement:
| Bullish Scenario:
If we see substantially deeper available liquidity on the Bid side of the market, this tells us that major price providers in the market are looking to buy the Euro against the US Dollar. Considering that close to 60% of all FX market volume is cleared through just six top banks, we see it prudent to be on the same side of the trade as major institutions and will favor a bullish bias on EURUSD ahead of the data release. | Bearish Scenario: |
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