Forex Trading Strategy For ISM Non-Manufacturing PMI 07/06/10

ISM or Institute for Supply Management is releasing its PMI (Purchasing Manager Index) and it is similar to the UK Services PMI as this release is targeting the services sectors.  As a leading indicator, traders generally pay attention to this report for hints of economic trend.  Here’s the forecast:

10:00am NY Time  US ISM Non-Manufacturing PMI     Forecast 55.1  Previous 55.4
ACTION:   BUY 58.0     SELL 52.00      USD/JPY

U.S. ISM Non-Manufacturing PMI is better known as the U.S.  Services PMI; the current expectation is above the 50 level at 55.1, as 50 is considered the medium point for the PMI’s, this release is considered as expansion in the services sector.  In the event that 58.0 is reached, we could see some USD strength and JPY weakness; however, if the opposite is true, or 52.0 figure is released, expect to see stronger JPY and possibly another strong risk aversion driven market, as at this stage a decline in future sentiment should provide reason for traders to sell.

If our tradable releases are reached, there is a good expectation of 50 pips of market movement within the next 120 minutes on both USD/JPY.  I’ll be looking to trade USD/JPY or other JPY crosses as they may all exhibit similar movements.

ISM PMI’s are leading indicator as stated before, and usually they do not affect the long-term trend of the market, unless we get a huge surprise.  If the release is below 50, it would be considered a huge surprise, and we should expect some heavy selling in the USD.

DEFINITION:

“The Institute of Supply Management (ISM) Non-Manufacturing Index measures the activity level of purchasing managers in the services 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. Trading Plan For US ISM Non-Manufacturing PMI 06/03/10
2. Forex Strategy for US ISM Manufacturing PMI 08/01/11
3. Forex Strategy for US ISM Non-Manufacturing PMI – 08/03/11
4. Forex News Trading Plan For US ISM Non-Manufacturing PMI 01/05/11
5. Forex News Trading US ISM Non-Manufacturing PMI 05/04/11
6. Forex News Trading US ISM Non-Manufacturing PMI 04/05/11
7. Forex News Trade – US ISM Non-Manufacturing PMI 11/03/10
8. Forex News Trading Plan For US ISM Manufacturing PMI 02/01/11
9. Forex News Trading Plan US ISM Manufacturing PMI 03/01/11
10. Forex Trading Analysis US ISM Manufacturing PMI 07/01/11

Tagged as: economic performance, economy, Expectation, institute of supply management, Inventories, Investors, ISM, Jobs, Leading Indicator, pips, purchasing manager index, purchasing managers, risk appetite, risk aversion, rrency, Services PMI, Supplier Deliveries