Intraday Market Thoughts

Will US Manufacturing Also Contract?

by Patrik Urban
Sep 1, 2011 12:49

Both Eurozone Manufacturing PMI and UK Manufacturing PMI contracted, US Manufacturing ISM and Unemployment claims are next. USD is stronger in the ongoing session with the exception of CHF that gained as EURCHF plunged 200+ points. UK Manufacturing PMI showed a similar result as Eurozone manufacturing PMI just 30 minutes earlier. Ashraf's Premium Trades are up

Manufacturing PMI in the UK slowed to 49 in August from 49.4 in July printing the worst result since June 2009. Despite the weak print, the figure was still stronger than the estimate of 48.5. The manufacturing sector in the UK contracted for the second time in a row.

The collateral deal between Finland and Greece showed up on the newswires again today as Irish finance minister said that the deal is definitely off the table and that both parties are seeking other solutions. German government official later said that German, Dutch and Finnish finance ministers will meet on Tuesday in Berlin to discuss this issue.

The New York session starts at 8:30 am ET with Unemployment claims that have been gradually increasing the past three weeks. This week claims are seen at 407K from previous 417K.

August ISM Manufacturing is due at 10:00 am ET and it is expected to fall further to 48.7 from previous 50.9. This is the first month in almost two years when analysts expect a reading below 50 which indicates a manufacturing sector contraction. The decline seen over the past four months (April’s reading was 60.4!) confirms the significant deterioration that the economy is experiencing. Should fundamental data releases continue to disappoint, the Fed’s projections that the growth will pick up in the second half of the year is likely to be questioned soon.

Traders should also note that FOMC member and Federal Reserve Governor Elizabeth Duke will speak at 12:00 pm about the housing market. Q&A session after the speech is expected so any remarks regarding monetary policy could cause high volatility.

Ashraf’s Premium piece that seeks to exploit, among others, further weakness in the euro can be found here: sub01/access/?a=486 Nonsubscribers can become members here:


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