Intraday Market Thoughts

USD Jumps on ISM Manufacturing, China PMI Next

by Adam Button
May 1, 2012 23:44

Surprising strength at US factories boosted the US dollar on Tuesday. On the day, CAD was the top performer while AUD lagged on the RBA cut. The final HSBC China manufacturing PMI is the highlight of Asia-Pacific trading. Tuesdays Intermarket Insights are up. See below

The ISM manufacturing index for April was at 54.8 compared to the 53.0 consensus. The market was likely priced for a number even lower after disappointing regional manufacturing data. The details of the report were also positive with employment and new orders picking up.

Currency pairs went from one daily extreme to the other after the data was released. Moments before the figures, EUR/USD hit a session high of 1.3284 only to fall to a session low of 1.3204 minutes afterwards. The pound and Canadian dollar followed a similar pattern.

Fedspeak was the other theme of the day but the market gleaned relatively little from the six Fed speakers Evans, Lockhart, Lacker, Fisher, Wiliams and Plosser. The doves remain dovish and the hawks hawkish but everyone appears somewhat uncertain and eager to view incoming data. The market is the same way and that helps to explain the outsized reaction to the ISM data. Fridays non-farm payrolls report will be even more extreme.

The highlight the Asia-Pacific session is the final HSBC Chinese manufacturing PMI at 0230 GMT. The flash reading was 49.1 and yesterdays official manufacturing PMI stood at 53.3. Overall, dont expect a large reaction to this data point, the preliminary numbers are the bigger driver.

Japanese markets may be volatile because its the final trading day of the week ahead of holidays on Thursday and Friday. Data on Japans monetary base and labor cash earnings will not be market moving.

Tuesdays Premium Intermarket Insights include fresh trades & charts on EURUSD, AUDUSD, CADJPY, gold and oil. Click here for direct access:



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