How Will US PMIs Affect the USD?

How Will US PMIs Affect the USD?

What will happen?

The US Markit will publish Flash Manufacturing and Flash Services PMIs (purchasing managers' indices) on June 23 at 16:45 GMT+3. These are the diffusion indices based on surveyed purchasing managers in the manufacturing and services industries. The surveys ask about 800 purchasing managers to rate the relative level of business conditions.

Why is it important?

Generally, businesses quickly react to the changing economic situation. After the indices are calculated, we can compare them and see the conditions of industries. If the index is above 50, an industry is expanding. Vice versa, if it is below 50, an industry is contracting. An expansion is usually a bullish sign for the USD because it means that the economy is growing.

During the previous release, Flash Manufacturing PMI came out at 57.5 (vs. 57.6 forecasted), while Flash Services PMI dropped to 53.5 (vs. 55.1 expected). As a result, the US dollar weakened in the short term. If you traded one lot of EURUSD on this release, you could have earned around $270.

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How to trade on US Flash Manufacturing and Services PMIs?

The indicators are likely to influence the USD pairs. You need to wait for the releases and compare the actual figures from the economic calendar with the forecasts.

  • If the actual numbers beat expectations, the USD will go up.
  • On the contrary, lower numbers will pull the USD down.

Check the Economic Calendar.

Instruments to trade: XAUUSD, EURUSD, USDCAD, USDCHF.

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