CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Services ISM bounce amp USD recovery

Article By: ,  Financial Analyst
August 5, 2014 7:31 PM

Is the USA back? Four days after the release of the sixth consecutive monthly NFP reading of +200k (not seen since 1997), the July services ISM posted its biggest monthly rise in five years, reaching a nine-year high of 58.7. The employment component hit a six-month high at 56.0 and the new orders component surged to 64.9, also a nine-year high. Meanwhile, the US dollar index is at 12-month highs.

Last Friday’s release of the July ISM hitting the highest level since April failed to support the USD and yields due to the a few disappointing details from the July jobs report.

Looking at the chart below, the US manufacturing ISM crossed above its UK counterpart for the first time since March 2013 (excluding a one-time appearance) in October.

The services chart remains dominated by the UK, but the margin may change later this year.

Having said that, UK services PMI has undergone a period of consolidation during the last seven months, while its US counterpart is playing catch-up. As the US economic machine attempts its great post-Q1 rebound, the US dollar will likely build further gains due to US economic merit rather than the ills of others.

USD rebound nears key test

The US dollar index seeks to post its fourth consecutive weekly gain, the biggest streak in over 17 months. The rally will deserve more attention upon a breach of the 83 level from the current 81.50.

A USD rally based on shifting monetary policy expectations may need to be manifested through stabilising US bond yields, which has not been the case, beyond a 2-3 day rally. In fact, the last time we saw some form of simultaneous rally in US yields and USD was in June 2013, when the taper tantrum (fears of tapering from the Fed) triggered a rush back into the USD currency away from EM currencies.

Twelve months later, we moved on to a new unofficial guidance. Just as in the UK, improving US data will require notable improvement in wage/earnings figures in order for the Fed to give inflation any serious thought.

 

 

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024