Yesterday’s US consumer confidence survey, manufacturing numbers, and housing data all showed sharp drop offs from their previous readings. However, the negative economic data was largely ignored in the FX markets as traders chose to focus on events in the euro zone and gains in equity markets. Today’s ISM data may indicate a slowdown in US economic growth with further evidence coming on Friday from the monthly jobs report.
Today’s Economic Data Releases:
GBP – Manufacturing PMI – 08:30 GMT
Expectations: 54.2. Previous: 54.6
After a respectable run for the pound during the previous week the rally has stalled, particularly in the Cable where the pair made three unsuccessful attempts to form a beachhead above the 1.6315 mark. A close above this level would target the April high of 1.6745. To the downside, initial support is found at 1.6300 followed by the rising trend line off of the 2010 May low which comes in today at 1.6120.
USD – ADP Non-Farm Employment Change – 12:15 GMT
Expectations: 177K. Previous: 179K.
The ADP report has a low success rate of predicting the jobs report from the Department of Labor. However, a strong ADP report may feed into USD selling today.
USD – ISM Manufacturing PMI – 14:00 GMT
Expectations: 58.1. Previous: 60.4.
A pullback in US economic data was apparent yesterday but was largely ignored by FX traders. Today market participants may look past the euro zone crisis and focus on the slowdown in the US economy. A sharp decline in today’s ISM data may cause some economists to scale back their Q2 GDP estimates and induce a bout of USD buying. EUR/USD support comes in at 1.4345 off of the May 20th high followed by 1.4130. To the upside the overnight high at 1.4440 is the first resistance level. A break here opens the door to 1.4590 and1.4750.
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