Data Dependant? ISM Back to Recession Territory

December 2, 2015

Data Dependant? ISM Back to Recession Territory:
With Glenn Stevens and the RBA chilling out into Christmas, the big overnight storyline was the slumping US manufacturing sector.

“USD ISM Manufacturing PMI (48.6 v 50.6 expected)”

That’s a fall below 50 for the first time since November 2012, and was also the weakest reading since June 2009. How was the US economy going in June 2009 you may ask? It was in recession!

That is not what an overly long USD Forex market wanted to hear, let alone a Fed that has cornered itself into a December rate hike already.

The following charts from Zero Hedge highlight the fact that the last time the manufacturing sector was this weak, the Fed was actually printing money…

20151201_ISM1_1

20151201_ISM2_1

Yet now they are going to hike? Whatever your opinion on ZH, when the Fed is waiting for data to give the go ahead on raising rates, those charts are pretty eye catching.

Now to the charts, where we’ve been talking about how long USD the market is heading into December and the possibility of trading a short squeeze in EUR/USD.

EUR/USD Daily:
151202_eurusd_daily
Click on chart to see a larger view.

With the USD finding some sellers overnight, the Euro received its first little kick out of our buy zone. That kick has at least given us some short term areas to manage our risk around and is something that we’ll be talking about in the Technical Analysis section of the Vantage FX News Centre as we finish the week.

———

On the Calendar Wednesday:
AUD RBA Gov Stevens Speaks
AUD GDP q/q

GBP Construction PMI

USD ADP Non-Farm Employment Change
CAD BOC Rate Statement
CAD Overnight Rate
USD Fed Chair Yellen Speaks

———-

Chart of the Day:
A return to clean, clear charts for today’s chart of the day!

AUD/USD Daily:
151202_audusd_daily
Click on chart to see a larger view.

While still taking in the longer term view of AUD/USD price tucking back above weekly trend line support, today’s chart strips everything back to the basics in search of a long entry.

Price has broken out of its short term bearish trend line and re-tested previous resistance this time as support. From here, the noted Aussie Dollar strength has helped kick price off the level hard, printing the biggest bullish daily candle for quite some time.

Do you see opportunity buying AUD/USD at these prices?

Dane Williams – @VantageFX

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