US ISM Manufacturing PMI Trading Plan 05/03/10

ISM Manufacturing PMI is a leading indicator and it is usually released at the beginning of the month; traders monitor this release as it may indicate an early change of sentiment of the economy.  Here’s the forecast for this event:

10:00am NY Time  US ISM Manufacturing PMI     Forecast 60.0  Previous 59.6
ACTION:   BUY 62.5      SELL 57.5      USD/JPY

Our tradable deviation for a is 2.5 points either way for a safe entry.  In the event we get a better than expected release, this could fuel the recent risk appetite rally; however, if the release is negative, below or close to the medium 50 level, we could see some minor consolidation resulting more JPY strength (USD/JPY moving down)… 

PMI usually doesn’t have lasting effects on the market and it certain does not change the long-term trend of currency pairs.  Therefore, I’d be looking for a short-term trade as the effect of this release should not last more the 2 hours.

DEFINITION

“The Institute of Supply Management (ISM) Manufacturing Index measures the activity level of purchasing managers in the Manufacturing sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation’s currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.”

Related posts:

1. US ISM Non-Manufacturing PMI 11/04/09
2. US ISM Manufacturing PMI 11/02/09
3. US ISM Manufacturing PMI m/m 12/01/09
4. Trading Plan For US ISM Non-Manufacturing PMI 06/03/10
5. Forex News Trading Plan For US ISM Non-Manufacturing PMI 01/05/11
6. Forex Plan For US ISM Manufacturing PMI 07/01/10
7. US ISM Non-Manufacturing PMI (Services) 01/06/10
8. Forex News Trading Plan US ISM Manufacturing PMI 03/01/11
9. US ISM Non-Manufacturing PMI 12/03/09
10. Forex News Trading Plan For US ISM Manufacturing PMI 02/01/11

Tagged as: currency, economic performance, economy, Expectation, Forecast, Fundamental News, fundamental outlook, institute of supply management, Inventories, Investors, ISM, Jobs, Leading Indicator, pips, purchasing manager index, Purchasing Manager's Index, purchasing managers, risk appetite, risk aversion, sentiment, Services PMI, Supplier Deliveries, Surveys, US, USA, USD