Data printed by the Institute for Supply Management put the U.S. manufacturing sector at a contractionary reading of 48.5 for the month of June. That’s lower than the expected 49.2 reading and May’s 48.7 index figure!
In fact, not only is June’s PMI the fastest decline seen since February, but it also marked the third consecutive month that the industry is in contraction.
Link to ISM’s June Manufacturing PMI report
Survey respondents talked about easing demand even as the New Orders index rose by 3.9 points to 45.4. Closely watched Employment and Prices indices also reflected weaknesses and pointed to easing price pressures for the month.
In a separate report, the S&P Global U.S. final manufacturing PMI eased from 51.7 to 51.6 in June and noted the “weak demand from domestic and export markets alike.”
The report also shared that higher current output requirements helped boost Employment to its fastest pace in 21 months while output price inflation slowed for a third consecutive month.
Link to S&P Global’s final June Manufacturing PMI report
Market Reactions
U.S. dollar vs. Major Currencies: 5-min
Overlay of USD vs. Major Currencies Chart by TradingView
The U.S. dollar traded in intraday uptrends against its major counterparts as higher U.S. 10-year Treasury yields and possibly traders taking off their risky trades ahead of this week’s potential catalysts helped boost the currency during the Asian and early European sessions.
The Greenback lost its momentum at the start of U.S. session trading and was trading near its intraday lows when the S&P Global manufacturing PMI printed a downward revision for the month of June.
Then, ISM dropped the manufacturing PMI which surprisingly contracted at a faster rate in June. Details like Employment and Prices also pointed to slower growth and easing price pressures.
Despite that, USD shot higher across the board. A jump in U.S. Treasury yields could have caused the dollar’s bullish move though speculations of a Trump presidency possibly leading to more stimulus and higher inflation may have also contributed to increased dollar demand.
