S&P PMI indexes for the US got released at 9:45 A.M. ET. Global Services PMI is showing a beat of 52.3 vs 50.8 exp (previous was 50.1), while the Composite PMI showed 52.1 vs 50.6 last month.
The US dollar is appreciating from these news and retracting some of its past days losses.
What does the beat in US PMIs infer for markets?
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The US Purchase Managers Index is a key economic indicator that provides insight into the health of a country’s manufacturing and services sectors.
It tends to add volatility to markets which is why it’s indicated as high impact on our MarketPulse Economic Calendar.
A PMI reading above 50 shows expansion in the sector, while a PMI below 50 shows contraction.
Expectations play a key role in market reactions. Even if a PMI reading comes in below the 50 mark—indicating contraction—markets may still respond positively if the figure exceeds forecasts.
In such cases, equities or the relevant currency can rally on the surprise beat, despite the overall weak headline number.
The PMI Index tends to lead CPI releases, observe the chart below provided by S&P Global – who provide all PMI releases.
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PMI as a leading indicator for CPI releases. Source: S&P Global
How did the PMI release impact markets?
The US dollar is leading all other majors after the release, as fears of a weaker US Economy affected by tariffs abate.
Stock indices are close to unchanged, up small with the Nasdaq up 105 points.
The strongest expansion was in the service sector though manufacturing tracked closely.
A concern for price increases due to supply shortages was noted in the report.
“prices charged for both goods and services have spiked higher as firms and their suppliers seek to pass on tariff levies to customers”
The Dollar Index moves higher in today’s session
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DXY 15M chart, May 22. Source – TradingView
The Dollar Index breaks yesterday’s highs.
We will have to see if the DXY breaks 100.00 or not, as we approach the psychological level
Safe trades!
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