Manufacturing PMIs in the epicenter

The USD edged lower against its counterparts on Friday, yet the big picture of an overall sideways movement seems to be maintained. The highlight of the week for USD traders and not only for them, is expected to be the release of the US employment report for May on Friday, yet for today we highlight the release of the ISM manufacturing PMI figure for the past month in an effort to gauge economic activity in the manufacturing sector of the US economy. Any reading above the cut-off point of 50 implying expansion of economic activity in the sector could provide support for the USD and vice versa. It should be noted that a number of Manufacturing PMI figures from various countries are to be released today and could provide comparative readings. Furthermore, China’s May manufacturing PMI figures, showed mixed signals on Friday and during today’s Asian session, implying that Chinese factories are still struggling to increase economic activity, thus possibly raising the uncertainty of the market which in turn may weigh somewhat on riskier assets.

On a technical level ,we note that the USD against the JPY, edged higher on Friday yet the pair’s motion tends to remain in a sideways direction between the 158.35 (R1) resistance line and the 156.55 (S1) support line. We tend to maintain our bias for the sideways motion to continue yet also note a possible bullish predisposition of the market for the pair as the 100 moving average (MA, green line), the 200 MA (orange line and the Bollinger bands have an upward slope, while the RSI indicator remains above the reading of 50. Yet for a bullish outlook we would require the pair to break clearly the 158.35 (R1) resistance line and start aiming for the 160.35 (R2) resistance level. Should the bears take over the reins of the pair’s direction we may see USD/JPY breaking the 156.55 (S1) support line and aim for the 153.80 (S2) support level.

Against the EUR, the USD weakened as the common currency seems to have gotten a boost on Thursday and Friday, yet the pair seems to remain in a sideways motion below the 1.0890 (R1) resistance line. We tend to maintain our bias for the sideways motion to continue for the time being given also that he 100 and 200 MA remain flat, yet some slight bullish tendencies seem to be present as the 20 MA which is also the median of the Bollinger bands has broken above the prementioned MAs and the RSI indicator remains above the reading of 50. Should the bulls be able to take charge of the pair’s direction we may see EUR/USD breaking the 1.0890 (R1) resistance line aiming for the 1.1010 (R2) resistance base. Should a selling interest be expressed by the market, we may see the pair breaking the 1.0740 (S1) support line aiming for lower grounds.

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Today we note the release of Turkey’s CPI rate and the Czech Republic’s, France’s, Germany’s and the UK’s Manufacturing PMI figures all for the month of May. During the American session, we note Canada’s Manufacturing PMI figure for May, followed by the US S&P Final Manufacturing PMI figure and US ISM Manufacturing PMI figure both for the month of May.

As for the rest of the week:

On Tuesday, we get Switzerland’s CPI rate for May and the US Factory orders rate and US JOLTS Job openings figure both for the month of April. On Wednesday we get Australia’s GDP rates for Q1, China’s Caixin services PMI figure and France’s HCOB services PMI figure both for the month of May, the US ADP Employment figure for May and the US ISM Non-Manufacturing PMI figure for May. On Thursday, we get Germany’s industrial orders for April, the Czech Republic’s trade balance and Canada’s trade balance figures both for April and Canada’s Ivey PMI figure for May. On a busy Friday, we note China’s trade balance figure for May, Germany’s industrial production rate for April, the Eurozone’s revised GDP rates for Q1, the highlight of the week which is the US Non-Farm-Payrolls figure and Employment data for May, and Canada’s employment data for May.