Deflating ISM Non-Manufacturing Survey To Spur EUR/USD Rebound

– U.S. ISM Non-Manufacturing Survey to Slow for Fourth Consecutive Month.

– Reading of 53.0 Would Mark the Lowest Print Since February 2014.

Trading the News: U.S. ISM Non-Manufacturing

A further slowdown in the ISM Non-Manufacturing survey may dampen the appeal of the greenback and spark a short-term rebound in EUR/USD as it puts increase pressure on the Federal Open Market Committee (FOMC) to further delay the normalization cycle.

What’s Expected:

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Why Is This Event Important:

Even though the U.S. economy approaches ‘full-employment,’ signs of a slowing recovery may encourage the FOMC to endorse a wait-and-see approach at the March 16 interest rate decision, and the dollar stands at risk of facing headwinds over the coming days should the central bank curb its outlook for growth and inflation.

Expectations: Bearish Argument/Scenario

Release

Expected

Actual

Pending Home Sales (MoM) (JAN)

0.5%

-2.5%

Consumer Confidence (FEB)

97.2

92.2

NFIB Small Business Optimism (JAN)

94.5

93.9

Waning household and business confidence may drag on service-based activity, and a marked slowdown in the ISM survey may generate a bearish reaction in the dollar as market participants push out bets for the next Fed rate-hike.

Risk: Bullish Argument/Scenario

Release

Expected

Actual

Personal Spending (JAN)

0.3%

0.5%

Advance Retail Sales (MoM) (JAN)

0.1%

0.2%

Consumer Credit (DEC)

$16.000B

$21.267B

Nevertheless, the pickup in private-sector consumption paired with the ongoing expansion in consumer credit may generate a better-than-expected ISM report, and a positive development may spur increased demand for the greenback as it boosts interest-rate expectations.