"Monday's data delivered a clear upside surprise. The ISM Manufacturing PMI jumped to 52.6 in January from 47.9, decisively beating expectations and marking the first expansion in factory activity in a year. While employment and inventories remain in contraction, the recovery in the employment sub-index suggests the labour drag may be easing. Taken together, the data reinforce the narrative that US growth remains resilient."
"This economic strength could feed into interest rate expectations. In this regard, Atlanta Fed President Raphael Bostic indicated that there was no need for rate cuts this year, which could affect sentiment. Attention now turns to Wednesday's ADP employment report and ISM Services PMI. Evidence of continued labour market strength and service-sector expansion would likely reinforce the dollar. However, partial government shutdown risks could cap gains, keeping investors cautious despite improving fundamentals."
The US dollar edged slightly lower after a two-day rebound as underlying support stayed firm and Treasury yields rose across the curve. The ISM Manufacturing PMI jumped to 52.6 in January from 47.9, marking the first yearly expansion in factory activity and decisively beating expectations. Employment and inventories still contract, but the employment sub-index recovery suggests labour drag may be easing, signaling resilient US growth. That strength could lift interest-rate expectations; Atlanta Fed President Raphael Bostic said there was no need for rate cuts this year. Attention turns to ADP employment and ISM Services PMI reports, while partial government shutdown risks could cap gains and keep investors cautious.
Read at London Business News | Londonlovesbusiness.com
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