Forex Investment and Currency Trading

The ISM non-manufacturing index continued its upward trend in August, rising to 48.4 from 46.4 in July, slightly above consensus expectations (48.0). The new orders component improved to 49.9, just shy of the breakeven level of 50 and indicative of a trough in demand. The business activity component broke through into expansionary territory, rising to 51.3 in August from 46.1 in July. The employment index increased to 43.5, the highest since September 2008, as labor market contraction continues to slow. Of the four equally weighted components of the headline index, only supplier deliveries declined, edging lower to 49.0 from 50.0. [...]

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Asia: Decent Aug PMI sets positive tone for Chinese data, BoK to stay on hold
Another month has past and the market will again be watching Chinese economic data closely (Friday 11). The decent PMI for the month announced last week should set a positive tone to retail sales and industrial production. That said, new loan growth in August may remain a worry, as commercial banks seem to have scaled back their lending aggressively. Meanwhile, the Bank of Korea is expected to hold rates unchanged at its MPC meeting (Thursday 10) and investors will search for hints of the timing [...]

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The ISM manufacturing index surged higher in August to 52.9 from 48.9 in July, well above the consensus (50.5) . This is the first reading above the breakeven level of 50 since January 2008 and a clear sign that the manufacturing sector is recovering. Especially encouraging was a jump in new orders to 64.9 in August from 55.3 in July, the highest level since December 2004, while production climbed to 61.9 from 57.9. The employment index also continued to improve, rising to 46.4 in August from 45.6. The index of supplier deliveries increased to 57.1 from 52.0, signaling slowing delivery [...]

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The second estimate of Q2 GDP showed that the economy contracted 1.0% in the quarter, which is unchanged from the advance estimate. This is an upward surprise relative to consensus expectations of -1.5%. Consumption was surprisingly revised to show a smaller drop of -1.0% compared to the previous estimate of -1.2%, suggesting a likely upward revision to June consumption and therefore kicking Q3 off to a healthier start. Also on the upside, exports were revised to show a smaller drop, leaving trade to add 1.6pp to growth. In addition, government expenditures, residential investment and equipment and software investment were all [...]

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