Article Highlights

  • U.S. ISM manufacturing PMI down from 52.6 to 49.4 vs. 52.0 consensus
  • U.S. initial jobless claims at 263K vs. 265K forecast
  • U.S. unit labor costs revised from 2.0% to 4.3% in Q2
  • U.S. non-farm productivity revised from -0.5% to -0.6%
  • U.S. construction spending flat in July vs. projected 0.6% increase
  • U.S. total vehicle sales down from 17.9M to 17.0M
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Retreat, dollar bulls, retreat! Weaker than expected U.S. reports forced traders to consider how these might affect the NFP report and the Fed’s policy bias.

Major Events:

Disappointing ISM manufacturing PMI  So much for counting on leading jobs indicators to hint at an upbeat NFP! Dollar bulls weren’t happy to find out that the August ISM manufacturing PMI fell from 52.6 to 49.4 to indicate industry contraction, worse than the projected fall to 52.0.

Components of the report showed that the employment component sank deeper from 49.4 to 48.3, reflecting a faster pace of contraction for the month. Indices for new orders, production, and imports all shifted from indicating growth to contraction as well.

Slowdown in other U.S. sectors?  The rest of the numbers from Uncle Sam came in mixed, with the initial jobless claims showing a smaller than expected 263K figure versus the 265K forecast and the quarterly unit labor costs enjoying a significant upgrade from 2.0% to 4.3% for Q2.

However, construction spending fell flat in July instead of showing the estimated 0.6% gain, possibly weighed down by the recent slump in property demand. Meanwhile, total vehicle sales also edged lower from 17.9 million to 17.0 million, lower than the estimated drop to 17.2 million.

Major Currency Movers:

USD – The Greenback ended the day in the red across the board, dragged lower by downbeat ISM data.

EUR/USD popped up from 1.1150 to a high of 1.1206 (+0.50%), GBP/USD rallied from 1.3246 to a high of 1.3312 (+0.57%), USD/JPY slid from 103.89 to 103.12 (+0.74%), and USD/CHF fell from .9854 to a low of .9785 (-0.70%).

Watch Out For:

  • 5:00 am GMT: Japanese consumer confidence (41.6 expected, 41.3 previous)

See also:

Asian Session Recap

London Session Recap

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