Ahead of the Fed’s September meeting, investors and traders are closely monitoring the last remaining economic reports, which could make some edits to the Fed’s final decisions.
Today after the opening of the U.S. session, a series of Purchasing Managers’ Indices (PMI), the Employment Index and the U.S. Producer Price Index (PPI) of the manufacturing sector will be released.
What is expected, and what might be affected by these indicators?
As is well known, everyone is waiting for confirmation of a slowdown in the U.S. economy, reduction of inflationary pressures and cooling of the labor market. These indicators are the key ones for further actions of the Fed. All other indicators, to some extent, are complementary to these main indicators and reveal different aspects of inflation structure and labor market dynamics.
Activity in the manufacturing sector is ahead of the services sector. If prices in the manufacturing sector rise, it will take some time for this growth to show up in the service sector prices as well. It is from this point of view that these indicators are of great interest, as they can provide clues for the next indicators to be published later.
To confirm expected actions of the central bank, the PMI business activity index should show a decline to values less than 48.0. A similar index from ISM should show the desired value of less than 46.0.
The employment index in the manufacturing sector should fall below 43.0. And PPI is expected to fall below 52.0.
This combination of today’s expected indicators may give an upward momentum to the EURUSD pair. The target of such a move may be the level of 1.1070. If this scenario is accepted, EURUSD will strengthen during today’s U.S. session.
The final recommendation is to buy EURUSD. Profits should be taken at the level of 1.1070. A Stop-Loss could be set at the level of 1.1040.
The possible loss should not exceed 2% of your deposit funds.
