Henry Liu
Former FPA Special Consultant
- Messages
- 473
ISM or Institute for Supply Management is releasing its PMI (Purchasing Manager Index) and it is similar to the UK Manufacturing PMI as this release is targeting the Manufacturing sector. 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 53.2 Previous 55.5
ACTION: USD/JPY BUY 56.0 SELL 50.5 USDJPY
The Trade Plan
We’ll be looking for 2.5 points of deviation for this trade. If a 56.0 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 50.5 figure is released, expect to see stronger JPY in the short term.
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. I’ll be looking to trade USD/JPY or 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 above the 50 level at 53.2, as 50 is considered the medium point for the PMI’s, 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.
If the release is below 50, it would be considered a huge surprise, and we should expect some heavy selling in the USD as the US economic outlook disappoints the market once again. We could take LONG trades EUR/USD or GBP/USD instead of SHORT USDJPY as we approach the 84.00 support.
Additional Thought
As stated before, the 50 level is crucial for this release and anything above the 50 could still be considered as positive, especially taking the context of the market for the week... therefore, I'd be very careful when taking a SELL trade on USDJPY as the overall market has pushed this pair to the strong support level.
Since NY traders will be waiting for this release to be out of the way before committing to a position, volatility may be high but there is no way to predict the direction… Therefore unless we get our tradable release, we should stay out…
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,
10:00am NY Time US ISM Manufacturing PMI Forecast 53.2 Previous 55.5
ACTION: USD/JPY BUY 56.0 SELL 50.5 USDJPY
The Trade Plan
We’ll be looking for 2.5 points of deviation for this trade. If a 56.0 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 50.5 figure is released, expect to see stronger JPY in the short term.
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. I’ll be looking to trade USD/JPY or 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 above the 50 level at 53.2, as 50 is considered the medium point for the PMI’s, 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.
If the release is below 50, it would be considered a huge surprise, and we should expect some heavy selling in the USD as the US economic outlook disappoints the market once again. We could take LONG trades EUR/USD or GBP/USD instead of SHORT USDJPY as we approach the 84.00 support.
Additional Thought
As stated before, the 50 level is crucial for this release and anything above the 50 could still be considered as positive, especially taking the context of the market for the week... therefore, I'd be very careful when taking a SELL trade on USDJPY as the overall market has pushed this pair to the strong support level.
Since NY traders will be waiting for this release to be out of the way before committing to a position, volatility may be high but there is no way to predict the direction… Therefore unless we get our tradable release, we should stay out…
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,
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