Article Highlights

  • U.S. ISM manufacturing PMI up from 53.2 to 54.7 vs. 53.7 forecast
  • U.S. construction spending up 0.9% vs. 0.5% consensus
  • U.S. ISM manufacturing prices up from 54.5 to 65.5 vs. 55.6 estimate
  • U.S. ISM manufacturing PMI jobs component up from 52.3 to 53.1
  • New Zealand GDT auction yielded 3.9% slump in dairy prices
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The Greenback’s performance was way better than Mariah Carey’s New Year’s Eve number as the currency hit all the high notes with ease.

Major Events:

Upbeat U.S. data – The highlight of the trading session was the ISM manufacturing PMI report, which churned out better than expected results. The reading climbed from 53.2 to 54.7, outpacing the 53.7 consensus and indicating a much faster pace of industry expansion… not to mention its highest level in two years!

Components of the report revealed that the gains were driven by a large jump in prices (54.5 to 65.5) and an improvement in employment (52.3 to 53.1), which sends positive vibes for this week’s NFP release. New orders, production, and new export orders also posted significant gains, signaling that factories are on solid footing and that business outlook is upbeat.

Medium-tier reports from Uncle Sam were also pretty impressive as construction spending rose 0.9% versus the 0.5% consensus in November, hitting its highest point in over a decade. The December final manufacturing PMI measured by Markit was upgraded from 54.2 to its 21-month high of 54.3.

U.S. equities off to a good start – Wall Street reopened for its first trading day of the year and it looks like traders woke up on the right side of the bed. The Dow 30 index rose 119.16 points to 19,881.76 (+0.60%), the S&P 500 advanced 19.00 points (+0.85%), and the Nasdaq was up to 5,429.08 (+0.85%).

Market participants seem to be turning their attention to the upcoming catalysts this week, namely the FOMC minutes and the NFP release, both of which are expected to reaffirm the message that the U.S. economy is showing great momentum. Of course investors are also wary about the incoming Trump administration, especially since the president-elect has taken to Twitter to give some clues about his policy changes.

Major Market Movers:

USD – The U.S. currency chalked up gains across the board, boosted by strong data and optimistic prospects for the economy.

EUR/USD slipped from 1.0401 to a low of 1.0340 then popped back to 1.0415, GBP/USD is down from 1.2289 to a low of 1.2199, USD/JPY climbed to a high of 118.60 but retreated to 117.22, and USD/CHF spiked to a high of 1.0307.

Watch Out For:

  • 12:30 am GMT: Japanese final manufacturing PMI (no change from 51.9 expected)

See also:

London Session Recap

Asian Session Recap

Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.

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