Today, two events will shake the US dollar. First, at 16:45 GMT+2, Markit, a statistical company, will release the US Flash Services PMI. Moreover, at 21:00 GMT+2, the Federal Reserve will release its meeting minutes.
US service data is coming
What will happen?
The US Services PMI will be out at 17:00 MT time on March 3. This is the leading indicator of economic health, which shows businesses’ attitude towards the economic conditions of the market. Basically, this is the survey of 400 purchasing managers, which asks them to rate the relative level of business conditions. The service sector is the largest element of the US economy (75% of GDP) and most exposed to Covid-19. Last time it rose to 58.7, exceeding the forecast of 56.8.
How to trade on Services PMI?
The indicator above 50 demonstrates the expansion of the industry, while the indicator below 50 signals the contraction. However, the market reaction mostly depends on whether the report exceeds expectations or not.
- If the actual PMI is higher than the forecasts, the USD will go up;
- If the actual PMI is lower than the forecasts, the USD will go down.
Instruments to trade: EUR/USD, USD/CAD, USD/JPY
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