Open an Account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open an Account
✖

EUR/USD, Wall Street analysis: ISM services could pack a punch today

Article By: ,  Market Analyst
September 5, 2024 1:11 AM

With so much attention on US employment data this week, I feel compelled to remind all that today’s ISM services report could pack a punch of its own. And that we are approaching today’s report under similar circumstances to the last: Traders are concerned that the US could be headed for a recession following weaker employment and ISM manufacturing reports. And that sentiment could be reversed again if ISM services data holds up.

 

 

The ISM services PMI was not particularly high at 51.4, but markets were positioned for more doom and gloom which wasn’t delivered. New orders and employment also expanded to further ease fears of a recession. And with services accounting for ~80% of the US economy, this report should carry more weight that perhaps it does. And if we’re to see a further strengthening of these figures today, it could give risk a decent bump and lower bets of a 50bp Fed cut. Of course, should they tank, then risk will surely roll over with the data and weigh on yields and the US dollar.

 

The chart shows that the S&P 500 and Nasdaq 100 fell upon the release of July’s ISM manufacturing report, yet the selling subsided on the day of the ISM services report. Momentum then turned higher, and the ASX 200 and Nikkei 255 followed each twist and turn.

 

 

Events in focus (AEDT):

Today’s employment data also counts as it really is a warmup for tomorrow’s NFP release. But the key point is that ISM services should not be ignored, and that we might have a better idea over whether the Fed will deliver a 50bp cut this year or not by Thursday’s close, if not by the weekend. And that will be the difference to whether risk rallies or takes another turn for the worse this week.

 

  • 21:30 – US Challenger job cuts
  • 22:15 – US ADP payrolls
  • 22:30 – US jobless claims, nonfarm productivity, unit labour costs
  • 23:45 – US services, composite PMI (final)
  • 00:00 – US services PMI

 

 

EUR/USD technical analysis:

I outlined a bullish bias on Tuesday which is now coming into play. Although we did see an initial spike of Monday’s low before momentum turned mu way. Still, a bullish engulfing candle formed on Wednesday, and the bias remains for a break above 1.11.

 

The 1-hour chart shows a bullish divergence formed on the 1-hour chart, and prices are now trying to form a trend having re-established the 38.2% Fibonacci level as support. Dips within Wednesday’s range could improve the potential reward to risk ratio for bulls, for a run back up towards the December high.

 

 

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

 

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.

GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.

© FOREX.COM 2024