The USDJPY looked poised to do some damage to the downside on a worse than expected ISM,but it was not to be – at least for now.
ISM for November comes in better than expectations, led by New Orders.
The ISM came in better than expectations at 58.7 vs 58.0 estimate. This is short of the 59.0 highs for the year (highest levels since 2011) but not by much. The New Orders component remains elevated at 66.0 which is the second highest reading going back to August 2009. The Employment component at 54.9 is down from 55.5 last month, but still shows solid manufacturing jobs growth. Prices paid fell sharply to 44.5 from 53.5. So no inflationary pressures. Overall, there were more “up” components than “down” components. So the trend remains positive
ISM data stalled the fall and has the pair back near the midpoint of the 8 day range.
Looking at the hourly chart of the USDJPY, the pair was down testing the underside of the broken trend line – below the 100 and 200 hour MAs (blue and green lines at 118.00- 118.02) as the number was being released. The better ISM number has pushed the price back higher, and it trades near the 50% of the move up from last week at 118.175. Traders looking for a sell opportunity should look to this area as that opportunity. However, sellers will also need to see the price move below the 100 and 200 hour MAs at the 118-118.02 level to give confirmation that despite the better data, sellers are more in control. So far, post the ISM, the 100 and 200 hour MA are acting as support (the low was been 118.09) suggesting that the sellers are indeed losing some of their momentum in trading today.
With the support holding and failure on the move below the 100 and 200 hour MAs, and the quick failure at new year highs above, I am not all that anxious to be a buyer or a seller. I would rather sit this dance out for the moment and see if there is a better tune later.
