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Forex Signal (Wed November 3, 2010 10:00am EDT NY Time) US ISM Non-Manufacturing PMI

Discussion in 'Current Forex Trading Signals' started by Henry Liu, Nov 2, 2010.

  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) and it is similar to the UK Services PMI as this release is targeting the services sectors. 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 Non-Manufacturing PMI Forecast 53.5 Previous 53.2
    ACTION: 56.5 BUY USDJPY / 50.0 BUY GBPUSD


    Trade Plan
    U.S. ISM Non-Manufacturing PMI is better known as the U.S. Services PMI; the current expectation is well above the 50 level at 53.5; as 50 is considered the medium point for the PMI’s, this release is considered as expansion in the services sector.

    We'll be using a deviation of 3 points in order to BUY USD and 3.5 points in order to SELL USD. In the event that 56.5 is reached, we could see some USD strength and JPY weakness; however, if the opposite is true, or 50 figure is released, expect to see stronger GBP and possibly another strong sentiment driven US morning.

    If our tradable releases are reached, there is a good expectation of 50 pips of market movement within the next 120 minutes on both USD/JPY and GBP/USD.

    I'll be using my retracement trading method for this release, for more information on my news trading methods, please read:
    Henry's News Trading Method

    The Market
    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. If the release is below 50, it would be considered a huge surprise, and we should expect some heavy selling in the USD. (However, considering the FOMC Meeting at 2:15pm, expect liquidity to dry out by European close)...

    With NFP coming up on Friday, traders will react to this release if we get a strong deviation, as it is logical to expect a higher NFP release on a stronger PMI, or vice versa. Traders will be focusing on 4 news releases this week for NFP, and they are: ISM PMIs (Manufacturing & Non-Manufacturing), ADP NFP, and Weekly Jobless Claims. If all of them point to the same direction, expect to see strong pre-news demand for USD for the remainder of the week.

    Additional Thoughts
    Market will be paying attention this week on ISM Non-Manufacturing PMI as the majority of U.S' work force is service related (around 90%?) Therefore a strong release in either direction will shift the current speculation of USD.

    Once again, I cannot overstress the importance of upcoming FOMC Meeting, therefore, unless we get a clear signal for this release, it's better to stay out of the market.

    Pre-news Considerations
    There are no pre-news trades for this release.

    DEFINITION:
    “The Institute of Supply Management (ISM) Non-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 for US ISM Non-Manufacturing PMI


    Thanks,


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    #1 Henry Liu, Nov 2, 2010
    Lasted edited by : Sep 8, 2016

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