USD/JPY: Trading the US ISM Manufacturing April 2015 outlook

The ISM Manufacturing PMI (Purchasing Managers’ Index) is based on a survey of purchasing managers in the manufacturing sector. Respondents are surveyed for their view of the economy and business conditions in the US. A reading which is higher than the market forecast is bullish for the dollar.

Update: A big disappointment with 51.5 points.

Here are all the details, and 5 possible outcomes for USD/JPY.

Published on Tuesday at 14:00 GMT.

Indicator Background

The views of purchase managers on the economy are always important, as they are considered to be attuned to the latest economic and financial developments, and their expectations could be an indication of future economic trends.

The index has been on a steady downturn, and slipped to 51.5 points in March, pointing to weak growth in the manufacturing sector. The markets are predicting a slight increase in the April report, with an estimate of 52.1 points.

Sentiments and levels

The pair has shown limited movement for over a month, and this trend could continue. A rate hike has likely been pushed back to September at the earliest, but market sentiment still remains positive about the US economy. So, the overall sentiment is bullish on USD/JPY towards this release.

Technical levels, from top to bottom: 122.19, 121.39, 119.88, 80, 117.94 and 116.82.

5 Scenarios

1. Within expectations: 49.0 to 55.0: In such a case, USD/JPY is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 55.1 to 59.0: An unexpected higher reading can send the pair well above one resistance line.
3. Well above expectations: Above 59.0: A sharp expansion in the manufacturing sector could push USD/JPY upwards, and a second resistance line might be broken as a result.
4. Below expectations: 45.0 to 48.9: In this scenario, USD/JPY could drop and break one level of support.
5. Well below expectations: Below 45.0: A very weak reading would point to sharp contraction in the manufacturing sector. This would likely push the pair downwards, possibly breaking a second support level.

For more about the yen, see the USD/JPY.

To follow this event live:

Powered by FXstreet.com
Get the 5 most predictable currency pairs