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Will PMIs Trigger Fresh Highs in the USD?
What will happen?
The United States will publish Flash Manufacturing and Services PMIs on Tuesday at 16:45 GMT+2. These indicators represent diffusion indices that are calculated based on surveys of purchasing managers in the above-mentioned industries. If the indices are above 50, they signal an expansion of industries, while an index below 50 demonstrates contraction.
Why is it important?
The Purchasing Managers Indices show how businesses react to current market conditions. As a result, this is the earliest preview into the economy's stability. That is, better data strengthen the currency.
In the picture below, EUR/USD spiked in August after lower-than-expected Flash Manufacturing and Services PMIs.
How to trade on the Flash Services and Manufacturing PMIs?
It’s easy! Just compare the actual data with the forecasts which appear a few days before the report in the economic calendar.
- If the indicators are higher than the forecasts, the USD will rise.
- Otherwise – fall.
Instruments to trade: EUR/USD, USD/JPY, GBP/USD
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