Is the ISM Manufacturing Miss the Final Nail in the Fed Rate Hike Coffin?

September 7, 2016

USD ISM Non-Manufacturing PMI: 51.4 v 55.4 expected.

ISM Manufacturing

Take a look at the above image taken from the News Terminal, which is free for all Vantage FX clients, and sure the index is still above 50 which indicates that the service sector remains in expansion, but look at that decline!

This August print is actually the lowest since 2009. Obviously not boding well for a September… heck, December rate hike…

The service sector number is so important because this industry contributes to most of the US economy’s growth and job creation and according to this print, all major parts of the sector are declining.

From a trading point of view, USD movements obviously dominated the AUD/USD and USD/JPY pairs that we were watching yesterday:

“The 4 hourly chart then shows today’s intra-day level that you can look to manage some risk around heading into this afternoon’s decision if you’re looking at playing from the long side.”

AUD/USD 4 Hourly:
Click on chart to see a larger view.

The RBA decision to keep rates on hold kept the Aussie Dollar steady and then the ISM miss spurred it on with the end result being a 100 pip rally from yesterday’s open. Plenty of pips to be taken out of that run if you got on board using that level to manage your risk.

Lastly looking forward in a light Tuesday morning blog, if the above data actually does put the final nail through the September interest rate hike coffin, then Gold is going to be a major benefactor:

GOLD Daily:
Click on chart to see a larger view.

With price having been testing weekly support for months now, this latest bounce off short term horizontal support could be the catalyst for a huge trend line breakout.

This trade is hot!


On the Calendar Wednesday:

GBP Manufacturing Production m/m

GBP Inflation Report Hearings
CAD BOC Rate Statement
CAD Overnight Rate

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Dane Williams – @VantageFX

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