ISM Non-Manufacturing PMI Better Than Anticipated
- Reading of 55.5 much better than anticipated
- Service sector largest part of US economy
- US assets continue to outshine
Early during the trading session on Wednesday, the US dollar had already been relatively strong. However, a slew of positive figures coming out of the United States continue to propel not only the dollar higher, but the stock markets as well.
With that in mind, the ISM Nine Manufacturing PMI figures came out at 1:15 PM GMT, showing that the United States continues to lead the rest of the world.
US economy continues to lead the way
The ISM Nine Manufacturing PMI figure takes a look at the service sector in the United States, showing whether or not purchasing managers are optimistic or cautious. The numbers coming in at 55.5 were much better than the anticipated 55.1 announcement, which therefore shows that the United States economy continues to lead the way for the rest of the world.
This is a sign that the US dollar will continue to strengthen as it has broken below the 1.10 EUR level initially during trading. It also shows that, perhaps, the US will continue to drive global demand at a time when it’s absolutely vital for it to do so.
The service sector is the largest part of the US economy. It therefore makes sense that this would have a massive effect on the S&P 500, which has broken higher again, and the NASDAQ 100, which is at an all-time high.
With all of that being said, the outlook for the economy should continue to be relatively strong in America, as it seems to be weathering the storm of global slowdown quite well. With massive tax cuts and the lowest unemployment since 1969, the United States is clearly the strongest economy currently.
Money to continue flowing into the US
This should continue to have money flowing into the United States and away from places like Europe and Asia, which are struggling. Asia has a further negative driver in the coronavirus ripping through China and other countries.
All of these factors drive demand for US assets in general with the exception of the bond market, which is selling off and driving yields higher during trading. US equities, the US dollar, and corporate paper are all leading the way during the trading session.
The Aussie dollar represents global growth in general. Perhaps the thought is that, along with the RBA holding rates, it’s possible that traders are looking for value in what will certainly be an economic recovery after the coronavirus is contained. This might be the one place where the US dollar struggles against a foreign currency.
That being said, the United States leads the way.