I'll let you check out the actual comments and reports with PMI coming in around consensus, but not a very stellar review by Markit which suggests our recent , very strong counter trend $USD rally, is still part of an overall strong dollar (although I doubt it for long) and is hurting the economy as well as recommends that perhaps the F_E_D put rate hikes aside for now.
However it was the 10 a.m. Institute for Supply Management Mfg Index that got the $USD moving this morning... for how long....?
Both reports are below (9:45 and 10 a.m. respectively).
The $USD's reaction is helping our near term USO / Oil Short as it topped this morning right at the 10 a.m. ISM release on the stronger $USD, GLD looks to have seen intraday/morning highs a few minutes before. However it remains to be seen if and how long the $USD can hold the gains as I suspect the counter trend bounce that produced the strongest 7-day move in the $USD since 2008, seems to be failing as we have expected, thus the phrase "Counter trend bounce"...
$USDX (Futures) pop at the 10 a.m. Eco-Data on a 1 min 3C chart.
However the larger picture of the $USD on a 4 hour chart shows our counter trend bounce which should fail and make a new low within the daily trend.
On a 60 min chart of the $USD, this is the area I have suspected to be the top or reversal process in the $USD. I have little doubt there will be volatility in the area, but more along the lines of choppy churning rather than the counter trend bounce higher which produced its highest intraday move last week on Wednesday.
The 15 min 3C chart of the $USDX showing what I believe is the topping area which should fail and send the $USD back down as the bounce ends. I expect a new low to be made, however recent dollar strength looks like recent dollar strength. Market is not forecasting the $USD's movement, just attributing Mfg. weakness and export weakness to it.
This is USO which I have expected to continue to pullback, at some point though it should be a strong long for a trend reversal. Until then, I expect a return lower in the base's range and will leave the USO short open for now.
Note USO / Oil topped right at 10 a.m. as it typically moves opposite the $USD.
As for GLD, it weakened a bit this morning between the two reports, but again I'll give it a bit more time and keep an eye on the $USD to see if this is just a knee jerk reaction or it holds its gains.
The eco data...
| PMI Manufacturing Index |
| Released On 6/1/2015 9:45:00 AM For May, 2015 |
| Prior | Consensus | Consensus Range | Actual |
| Level | 54.1 | 53.8 | 53.5 to 54.3 | 54.0 |
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Highlights
Weak exports remain the unfortunate theme of U.S. manufacturing data, holding down new orders and holding down Markit's PMI to 54.0. Growth in new orders is the weakest in 16 months with exports, hit by strength in the dollar, in outright contraction for a second month. Orders from the energy sector are also weak.
Employment is this report continues to run at a much stronger pace than actual manufacturing employment which is flat. Given the slowing in orders, slowing in employment for this sample is just a question of time. Production growth is the weakest of the year and backlog orders posted their slowest rise in four months. Price readings are mixed with inputs rising for the first time in four months but outputs up only slightly from last month's 11-month low.
There's plenty of signs of weakness but this report is still running much hotter than any all other manufacturing report. Watch for the ISM report coming up at 10:00 a.m. ET where the Econoday consensus is calling for a very sluggish 51.8.
| ISM Mfg Index |
| Released On 6/1/2015 10:00:00 AM For May, 2015 |
| Prior | Consensus | Consensus Range | Actual |
| ISM Mfg Index - Level | 51.5 | 51.8 | 51.0 to 52.7 | 52.5 |
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Highlights
May was a modestly positive month for ISM's manufacturing sample with the headline index rising 1.0 point to a better-than-expected 52.5 which is near Econoday's high-end forecast. New orders are the highlight of the report, up 2.3 points to 55.8 which is the best reading of the year. Contraction in export orders has been pulling down total orders in many reports but were unchanged at 50.0 in this report.
Employment moved back over 50 to 51.7 for a 3.4 point gain while production looks solid at 54.5. Backlog orders, at 53.5, are back over 50 for the first time since February. Supplier deliveries show very little change, at 50.7 vs 50.1 in the prior report to suggest that snags tied to the first-quarter port slowdown have unwound. Price data show slightly lower costs for raw materials.
The 52.5 headline for this report may be better-than-expected but it's still very soft. The manufacturing sector appears to be stumbling through the second quarter.
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