ISM Manufacturing Misses, Fed Rate Hike May Not Happen

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USD ISM Non-Manufacturing PMI: 51.4 v 55.4 expected.

USD ISM manufacturing

Let’s have a look at this image, taken from the News Terminal, a free tool for all Vantage FX clients, and sure, the index is above 50, indicating that the service sector remains in expansion. Still, look at that decline!

This August print is actually the lowest since 2009. Obviously, this does not bode well for a September… heck, December rate hike…

The service sector number is so important because this industry contributes to most of the US economy’s growth and job creation and according to this print, all major parts of the sector are declining.

From a trading point of view, USD movements obviously dominated the AUD/USD and USD/JPY pairs that we were watching yesterday:

“The 4 hourly chart then shows today’s intra-day level that you can look to manage some risk around heading into this afternoon’s decision if you’re looking at playing from the long side.”

AUD/USD 4 hours

AUD/USD 4 hours

The RBA decision to keep rates on hold kept the Aussie Dollar steady and then the ISM miss spurred it on with the end result being a 100 pip rally from yesterday’s open. Plenty of pips to be taken out of that run if you got on board using that level to manage your risk.

Lastly looking forward in a light Tuesday morning blog, if the above data actually does put the final nail through the September interest rate hike coffin, then Gold is going to be a major benefactor:

GOLD daily

GOLD daily

With price having been testing weekly support for months now, this latest bounce off short term horizontal support could be the catalyst for a huge trend line breakout.

This trade is hot!

This Wednesday

AUD GDP q/q

GBP Manufacturing Production m/m

GBP Inflation Report Hearings

CAD BOC Rate Statement

CAD Overnight Rate

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This is a guest post originally appeared on Vantage FX. Reposted with permission.

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