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Forex Signal (Mon February 1 2011, 10:00am NY Time EST) - US ISM Manufacturing PMI

Discussion in 'Current Forex Trading Signals' started by Henry Liu, Jan 31, 2011.

  1. Henry Liu

    Henry Liu Former FPA Special Consultant

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    ISM or Institute for Supply Management is releasing its PMI (Purchasing Manager Index) today. As a leading indicator, traders generally pay attention to this report for hints of economic trend. Here’s the forecast:

    10:00am NY Time US ISM Manufacturing PMI Forecast 57.8 Previous 58.5
    ACTION: 61.0 BUY USDJPY / 55.0 BUY EURUSD

    The Trade Plan

    We’ll be looking for around 2.5 ~ 3.0 points of deviation for this trade. If a 61 or better number is released, we could see some USD strength and JPY weakness, thererefore a BUY on the USD/JPY. If the opposite is true, or 55.0 figure is released, expect to see weaker USD in the short term, therefore we should BUY GBPUSD (or EURUSD).

    If our tradable releases are reached, there is a good expectation of 50 pips of market movement within the next 60 minutes on USD/JPY or EURUSD. I’ll also be looking to trade other JPY crosses as they may all exhibit similar movements using my Retracement Trading Method.
    Henry's News Trading Method

    The Market
    U.S. ISM Manufacturing PMI current expectation is way above the medium 50 level at 57.0, and this release is considered as expansion in the manufacturing sector. ISM PMI’s are leading indicator as stated before, and usually they do not affect the long-term trend of the market, unless we get a huge surprise. However, in a week such as this week, with NFP scheduled on Friday, PMI's usually would have more market impact.

    And of course, as the first significant U.S. economic indicator for February, market may react with a bit more exaggeration, therefore it is probably the best to wait until after this release before jumping into the market, even if you don't plan to trade it...

    Additional Thought
    With the possibility of USD mounting a strong comeback, this is the first real data that would provide insight towards the NFP on Friday, therefore on a strong surprise, market may move strongly...

    Pre-news Consideration
    Since PMI's are not trend changing releases, there should be no overwhelming sentiment prior to the release.

    DEFINITION
    “The Institute of Supply Management (ISM) Manufacturing Index measures the activity level of purchasing managers in the services sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation’s currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.”

    Historical Chart & Data US ISM Manufacturing PMI

    Thanks,


    [​IMG]
     
    #1 Henry Liu, Jan 31, 2011
    Lasted edited by : Sep 8, 2016

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