US S&P Global Composite PMI Shows Accelerated Expansion in November
In November, the S&P Global Composite PMI for the US rose to 55.3 from 54.1 in October, indicating a continued expansion in the private sector’s business activity. Let’s delve into the details of the latest PMI data:
Key Highlights:
- S&P Global Manufacturing PMI improved to 48.8 from 48.5, showing a slight contraction in the sector.
- Services PMI rose to 57 from 55, indicating a robust expansion in the service sector.
Insights from the Survey:
According to Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, the business sentiment in November has brightened significantly. Confidence about the upcoming year has reached a two-and-a-half year high. The optimism is fueled by the anticipation of lower interest rates and a pro-business approach from the incoming administration, driving output and order book inflows higher.
Market Reaction to US PMI Data
The US Dollar has maintained its strength following the release of the PMI data. The USD Index was up 0.55% at 107.65 at the time of the press.
US Dollar Price This Week:
The table below shows the percentage change of the US Dollar against major currencies this week. The USD showed strength against the Euro.
Expectations from the Next S&P Global PMI Report
Investors anticipate a slight improvement in the flash Manufacturing PMI to 48.8 and a higher Services PMI at 55.3 for November. A weak performance in the manufacturing sector would not be surprising, but an expected uptick could alleviate concerns, especially if the Services PMI continues to indicate a solid expansion.
Impact on the USD and Federal Reserve Policy:
Market participants will closely monitor inflation and employment comments in the surveys. Following Fed Chairman Jerome Powell’s cautious stance on further rate cuts, expectations for a December rate reduction have diminished. The probability of a rate cut at the last policy meeting of the year is currently around 55%.
In case of unexpected results in the Services PMI, a USD selloff may occur. Conversely, if the Services PMI aligns with expectations and the Manufacturing PMI enters the expansion territory, the USD could strengthen against other currencies.
Release of October Flash US S&P Global PMIs and EUR/USD Impact
The S&P Global PMI report for October will be released on Friday at 14:45 GMT. The manufacturing sector is expected to remain weak, while the service sector is likely to show strength.
Before the release, EUR/USD remains bearish from a technical perspective. If the pair closes below 1.0500, further downward movement is anticipated. On the upside, resistance levels are seen at 1.0600 and 1.0700.
Federal Reserve FAQs
- The Fed’s monetary policy aims to achieve price stability and full employment through interest rate adjustments.
- The FOMC holds eight policy meetings a year to make monetary policy decisions based on economic conditions.
- Quantitative Easing (QE) and Quantitative Tightening (QT) are non-standard policy measures used by the Fed during crises.
Stay tuned for the latest updates on the US economy and how it impacts global markets.
