- The ISM manufacturing PMI dropped to 48.0 in July, below the consensus.
- The US dollar is still defensive, returning to minimum of two days.
In July, the US manufacturing sector lost some impulse. The ISM manufacturing PMI fell from 49.0 in June to 48.0, which was also inferior to the predictions of analysts of 49.5.
The employment index fell from 45.0 in July to 43.5, which means that the payrolls of the sector are having some problems. The paid price index, which monitors inflation, fell from 69.7 to 64.8. Finally, the index of new orders rose from 46.4 to 47.1 in the previous reading.
According to the statement: “Regarding production, the production index increased intermensually to advance more in expansion territory; however, the employment index fell more into contraction, since the panelists indicated that managing the number of employees remains the standard in their companies, instead of hiring. The mixed indicators in production suggest that companies remain cautious in their contracts even with an increase in production,” argued ” Spence, MBA, president of the Manufacturing Business Survey Committee of the Institute for Supply Management (ISM).
Market reaction
The US dollar (USD) operates with a marked bearish bias on Friday, around the 98.80 region when measured by the US dollar index (DXY) while investors evaluate the recent published data as well as the speculation of a possible rate cut by the Fed in September.
GDP – FREQUENTLY QUESTIONS
The gross domestic product (GDP) of a country measures the growth rate of its economy for a certain period of time, normally a quarter. The most reliable figures are those that compare GDP with the previous quarter (for example, the second quarter of 2023 with the first of 2023) or with the same period of the previous year (for example, the second quarter of 2023 with the second of 2022).
The annualized quarterly figures of GDP extrapolate the growth rate of the quarter as if it were constant for the rest of the year. However, they can be misleading if temporary disturbances affect growth in a quarter but it is unlikely that they last all year, as happened in the first quarter of 2020 with the burst of the coronavirus pandemic, when the growth collapsed.
A higher GDP result is usually positive for the currency of a nation, since it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attracting greater foreign investment. Similarly, when GDP falls it is usually negative for the currency.
When an economy grows, people tend to spend more, which causes inflation. The Central Bank of the country then has to raise interest rates to combat inflation, with the side effect of attracting more world investor capital tickets, which helps the appreciation of the local currency.
When an economy grows and GDP increases, people tend to spend more, which causes inflation. Then, the country’s central bank has to raise interest rates to combat inflation. Higher interest rates are negative for gold because they increase the opportunity cost to keep gold in the face of placing the money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for the price of gold.
Source: Fx Street

I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.