11 Straight Monthly Gains by US Manufacturing Not Enough to Help Buck

Talking Points:

- ISM Manufacturing PMI at yearly high, 54.9 (low of 51.3 in January).

- Weak construction data highlights fragility of US housing market in Q1.

- USDJPY trades back to European/North American session lows near ¥102.15.

Despite concerns from respondendts that international economic and political issues were beginning to impact demand for US exports, the US manufacturing sector was mostly upbeat about the sector’s prospects going forward. Overall, the headline index expanded to a yearly high of 54.9, the eleventh consecutive monthly gain by the manufacturing sector, and marks the fifty-ninth straight month of growth by the US economy.

Nevertheless, with concerns lingering about the US growth engine following the disappointing Q1 GDP report yesterday, the US Dollar’s tone remained rather dour following the 14:00 GMT data releases. Here’s the data that stunted gains in equity markets and drove the US Dollar lower:

- ISM Manufacturing PMI (APR): 54.9 versus 54.3 expected, from 53.7.

- ISM Manufacturing Employment (APR): 54.7 from 51.1.

- Construction Spending (MAR): +0.2% versus +0.5% expected, from -0.2% (revised lower from +0.1%) (m/m).

USDJPY 5-minute Chart: April 30 to May 1, 2014 Intrasession

Charts Created using Marketscope – prepared by Christopher Vecchio

Following the releases, the USDJPY jumped to a session high of ¥102.36, but quickly gave back all of its gains and tumbled back to its lows seen around the European sessio open this morning, at 102.16. The USDJPY has traded in an exceptionally tight range today, barely 25-pips, as market participants around the globe take holiday for May Day. The low volatility environment should onlyad f last through today’s session as there is the always-important US Nonfarm Payrolls report tomorrow.

Read more: AUD/USD Woes Not Shared by GBP/USD – GBP/AUD Breakout Imminent?

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail [email protected]

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, please fill out this form