The ISM index for the US industry fell the worst in two years and reached 54.1 pts in December. The consensus assumed a decline from 59.3 to 57.5 points. While any print above 50 is consistent with expansion, the softening in the headline figure suggests a moderation in the pace of growth broadly and perhaps the end of an era of near-euphoria in the manufacturing sector more broadly. This triggers a strong weakening of the USD, which is accompanied by a drop in the yield on US debt.
The ISM Manufacturing is a monthly index released by the Institute of Supply Management which tracks the amount of manufacturing activity that occurred in the previous month. ISM Manufacturing assesses the state of US industry by surveying executives on expectations for future production, new orders, inventories, employment and deliveries.
Let's now take a look at the US Dollar Index technical picture at the H4 time frame. The recent rally to the level of 96.95 has been retraced by more than 61% and the price is now trading around the level of 96.39. Moreover, the price is still below the trendline (dashed black) which indicates the bulls are still weaker as the momentum is now neutral. In order to regain the control of the market, the bulls would have to break through the level of 96.57 and head higher, towards the recent swing high. Otherwise, the bears will push the prices below the level of 96.17 and the swing low at 95.82 will be tested again.
