It's a good time to be an economic data trader.
The US dollar is getting absolutely flushed in the aftermath of the S&P Global PMI data. The services survey fell to 44.1 compared to 49.2 expected in the second big miss in a row.
Even with the huge miss, the 130 pip straight-line decline in USD/JPY is a shock move. It's a signal on how crowded USD-longs are right now and how important economic data is.
The short-term chart is like a head-and-shoulders pattern being formed and completed all within 20 minutes.
US 2-year yields are down 10 basis points to underpin the move but that still doesn't erase the rise in the past two trading days.
Given that, this move looks a tad overdone to me but it's a tough one to fade because of positioning.What's worrisome for dollar bulls is that the S&P Global surveys for Europe were solid today and that was where everyone was looking for weakness. Presumably, the methodologies and proceedures are the same and yet they're capturing a sharp deterioration in the US but not Europe? That's hard to believe given European energy prices but if you're going to be a data trader, you have to go with the economic data.
