US ISM Non-Manufacturing PMI Summary
El Institute of Supply Management (ISM) will release the Non-Manufacturing Purchasing Managers Index (PMI), also known as ISM Services PMI at 14:00 GMT this Thursday. The indicator is expected to rise to 63 in May from the previous 62.7. The employment subcomponent is expected to have fallen to 58 during the reported month compared to 58.8 in April.
Commenting on the US labor market, Joseph Trevisani, senior analyst at FXStreet said: “Something unusual seems to be happening in the US labor markets and may be the key to how traders view the US economic recovery. New business is coming to companies as consumers make up for lost time over the past year. Prices are skyrocketing as demand collides with persistent shortages of products and materials from the lockdown regime. Yet despite the booming economy, the hiring is pitiful. “
How could it affect the EUR / USD?
Ahead of the key release, a combination of supporting factors provided a good boost to the USD and dragged the EUR / USD closer to the weekly lows touched in the previous session. A good recovery in US Treasury yields sustained the dollar. Aside from this, the bullish ADP report further inspired USD bulls and contributed to the intraday selling bias surrounding the pair.
A better-than-expected US ISM services PMI figure, especially in the employment subcomponent, will further fuel speculation that the Fed would start cutting its bond buying program sooner rather than later. This should continue to support the USD’s intraday strength and continue to put pressure on the pair. Conversely, a weaker reading could prevent USD bulls from making aggressive bets and help limit deeper losses for the pair. That said, a sharp pullback in US equity futures could act as a tailwind for the dollar – safe haven, suggesting that the path of least resistance for the pair is to the downside.
In the meantime, Valeria Bednarik, Chief Analyst at FXStreet He offered a brief technical outlook: “The EUR / USD fell to a fresh weekly low of 1.2158, holding close ahead of the Wall Street open. The 4-hour chart shows that after meeting sellers around its 20 SMA, the pair accelerated below the 100 SMA, indicating resurgent selling interest. Technical indicators are heading firmly south into negative levels, reaffirming the bearish case. The pair has room to extend its decline below 1.2100 if the current sentiment persists. “
About the US ISM Services PMI
The ISM Non-Manufacturing Index published by the Institute for Supply Management (ISM) shows business conditions in the US non-manufacturing sector. It is worth noting that services make up the largest sector of the US economy. and a result above 50 should be considered as support for the USD.
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