Stagnant ISM manufacturing PMI pressures the USD

Monday’s bland US ISM manufacturing PMI of 50.1 diluted the spice of last week’s hawkish FOMC statement which had benefited the USD bulls. This has been the lowest ISM figure in two and a half years, and one which slowly gravitates to contractionary levels below 50. Dollar sensitivity is rife and investor anxieties may continue to mount as a result of soft data from the US clashing with the hawkish bias of the Fed. History has illustrated that when the ISM has failed to pick up, the Fed have held off on raising US rates and this thought will leave the USD vulnerable and open to further losses.

Now that the Fed’s focus has shifted away from global developments, the pressure is back on US economic data as the trigger for when the Fed will move forward with a rate rise, and this has been a rough start. The ISM employment index decreased to 47.6% in October, dealing an additional blow to the USD bulls. With this being the lowest ISM employment percentage since the US exited the recession in 2009, concerns are escalating that the ADP on Wednesday and NFP on Friday will follow the same negative trajectory, leaving the USD open to losses.

Gold bulls have suffered greatly following the hawkish FOMC statement last week Wednesday. The precious metal which hit 3-1/2 month highs in the second week of October has now plummeted to one-month lows as bemused investors ponder on the prospects of a US rate hike in 2015. Whilst some hopes of a US rate hike have been reinvigorated, the disappointing ISM manufacturing figure from the States yesterday has left Gold in a state of limbo. This yellow metal remains technically bearish on the daily timeframe, but the catalyst for a concise move will be Friday’s US NFP release. If by any chance this key employment report follows the same disappointing fashion as the ISM, then Gold bulls may be offered a lifeline.

The Fed’s credibility is on the line and investors may eventually ignore the repetitive bark if the bite which is a rate hike fails to materialize in December.

USDCAD
The USDCAD is in the process of turning technically bearish on the daily timeframe. A breakdown below the 1.3050 support may open a path to the next relevant support at 1.2850.

GBPAUD
The GBPAUD is technically bullish on the daily timeframe. As long as prices can keep above the previous lower high at 2.1100, there may be an incline to the next relevant resistance at 2.1800. Prices are trading above the daily 20 SMA and the MACD has crossed to the upside.

EURJPY
The EURJPY is technically bearish on the daily timeframe. Prices are trading below the daily 20 SMA and the MACD has crossed to the downside. As long as prices can keep below the 135.00 resistance, there may be a decline to the next relevant support at 131.00.