Citi Group recently suggested an imminent drop in the U.S dollar index to 85 level. President Trump also opinionated last week that the U.S dollar is overvalued and a weaker national currency could work in the best interest of the economy in the long run. Amidst his suggestion to the U.S Federal Reserve to cut rates to zero, the Institute of Supply Management (ISM) has published its report for the non-manufacturing Purchasing Managers Index (PMI) today at 15:00 GMT. Owing to the largely positive outlook, the U.S dollar has been printing significant gains in the past few hours.
Non-Manufacturing PMI Printed A 2.1% Growth in October
According to the report, the non-manufacturing sector noted a faster than expected expansion in economic activity in the United States of America. As per the ISM, the non-manufacturing index has been highlighted at 54.7 for the month of October, compared to a significantly lower 52.6 in September. This marks a remarkable 2.1% growth in the non-manufacturing sector. The financial analysts had previously anticipated the figure to be confined within 53.5. Having beaten the analysts’ forecast, the ISM non-manufacturing PMI has stirred up the volatility in the forex market with major pairs like EUR/USD and GBP/USD having lost 0.61% and 0.12% respectively for the day.
The U.S dollar index that compares greenback’s value against six major currencies was last seen breaking above the 97.90 mark, making a new daily high on Tuesday. EUR/USD has dropped to around 1.1070 level while Cable fell below 1.2900 again and is currently trading at 1.2880.
The report further added that while the figure for non-manufacturing PMI improved as compared to that of September, respondents are still cautious about the geopolitical scenario, labor resources, and the ongoing uncertainty regarding the U.S – China trade negotiations.
13 out of 18 industries included in the non-manufacturing sector noted better than expected economic activity in October. Maximum growth has been reported in Agriculture while Public Administration and Information found a spot at the bottom of the list. The only 5 industries with declining economic activity in the non-manufacturing sector in October include educational services, mining, wholesale trade, retail trade, and other services.
Other Noticeable Figures Highlighted In The Report
Other noticeable figures highlighted in the report include a 1.8% increase in non-manufacturing Business Activity Index from September’s 55.2% to 57% reported in October. ISM has declared it to be the 123rd consecutive month that business activity in the non-manufacturing sector has expanded without interruption. Moreover, the new orders index presented a 1.9% growth while the employment index registered a 3.3% growth in October.