On the face of it, today’s miss in the US ISM manufacturing survey wasn’t a big one. It was at 46.7 compared to 47.6. But I don’t think the consensus was accurate for what the market was expecting due to an extremely strong regional print yesterday. That had people talking about a 50 reading so some of the selling in the US dollar afterwards may have been related.
We also got some comments from Chicago Fed President Goolsbee who said inflation is coming down ‘exactly’ as we want and that the labor market has gotten to a better place. Those are hints of a pivot to dovish, or at least neutral. The big event is at the top of the hour with Powell.
Treasury yields are lower now and that’s sent USD/JPY down to 147.36 with the market now pricing in 121 bps of cuts next year.
USDJPY 10 mins