An index that will rock USD

An index that will rock USD

What will happen?

The United States will publish the ISM Non-Manufacturing PMI on Thursday, January 6, at 17:00 GMT+2 (MetaTrader time).

Why is it important?

The index shows how managers estimate business conditions in the services industry. It’s better when this indicator is increasing. In addition, there is another thing to consider. Look at the indicator’s value: if it’s above 50, the services industry is expanding, and all is well. The industry is contracting if the ISM Non-Manufacturing index shows a reading below 50.0. The relation between the indicator and the US dollar is straightforward. The higher the ISM Non-Manufacturing index is, the better for the USD.    

What happened last time?

On December 3, the ISM Non-Manufacturing index came out much higher than expected. The number was 69.1 versus the forecast of 64.9. As a result, USD/CAD rose from 1.2780 to 1.2840 during the several hours after the release.

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How to trade on ISM Non-Manufacturing PMI?

Open the economic calendar a few days before the US Initial Jobless Claims release. How high is the forecast? Notice that the recent readings have been very high. As a result, it won’t be easy for the indicator to outmatch forecasts. 

  • If the actual figure exceeds the forecast, the USD will go up.
  • If the actual figure misses the forecast, the USD will go down.

Instruments to trade: all the major pairs and XAU/USD

Check the economic calendar

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