US Dollar Muted on ISM Beat as Traders Await Fed Meeting

US Dollar Analysis & News

  • ISM Headline Beats, Prices Paid Turns Higher, New Orders at 15 Month Lows
  • USD Muted as Market Participants Await Fed Meeting

ISM Headline Beats, Prices Paid Turns Higher, New Orders at 15 Month Lows

US ISM Manufacturing PMI for October fell to 60.8, although beat expectations of a drop to 60.5. Meanwhile, the sub-components were generally mixed with the new orders index falling to 59.8 from 66.7, which marked the lowest level since June 2020. Prices paid rose to 85.7 from 81.2, which will likely fuel concerns that inflation is not as transitory as initially thought. On an encouraging note, the employment index rose to 52 from 50.2 and thus bodes well for this week’s NFP report. That being said, the report will do little to impact the near term direction for Fed policy, with the Bank expected to taper asset purchases, therefore, the focus will be on the accompanying statement and Powell’s presser in light of elevated inflation.

ISM Manufacturing Prices Paid Elevated Amid Severe Supplier Delays

US Dollar Muted on ISM Beat as Traders Await Fed Meeting

USD Reaction Muted

The initial reaction across major assets have been muted. As I noted earlier, this is unlikely to move the dial for Fed policy in the short run. In turn, the USD continues to hold the 94.00 handle, while the S&P 500 tests 4600. Going forward, the main focus will be on this week’s FOMC meeting, where risks are skewed towards a potentially more hawkish outcome.

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US Dollar Muted on ISM Beat as Traders Await Fed Meeting

Source: DailyFX