The US has disappointed forex traders with several economic disappointments over the past few weeks. Most notably two non-farm payroll reports which came in much weaker than expected; last month’s non-farm payroll report was especially bad as weather had no impact on the disappointment in the US labor market. In addition plenty of regional manufacturing reports all came in much worse than expected which further pressured the US Dollar.
Some have started to speculate that the US Federal Reserve may started to slow down its tapering or skip it altogether during the next Fed meeting especially if this week’s non-farm payroll report will disappoint forex traders for a third time in a row. Should the Fed indeed reduce or skip tapering the US Dollar could tumble very aggressively. The majority view currently calls for a repeat of a $10 billion taper this month.
Forex traders who counted on another serious of economic disappointments this week have been disappointed once again as Monday’s series came in better across the board which continues a process of mixed and conflicting economic data.
Here are the reports which surprised to the upside during Monday’s forex trading session which allowed the US Dollar to regain some lost ground:
Personal Income and Spending – Incomes in the US rose 0.3% in January which beat estimates for a gain of 0.2%. The boost in earnings also transferred to an increase in personal spending which rose by a very strong 0.4% when estimates called for a 0.1% increase. This suggests that consumers fared much better than expected despite bad weather which has been blamed for a lack of consumer activity.
Markit PMI Final Reading – February’s Markit PMI was initially reported at 56.7, but the final reading came in slightly higher at 57.1 which suggests that February was stronger than expected.
ISM Manufacturing Index – Forex traders who are bullish on the US Dollar received a much need surprise as the ISM Manufacturing Index was reported at 53.2 which beat estimates by 1.2 points in February and 2.0 points above January’s reported 51.2.
US Construction Spending – Economists expected construction spending to contract by 0.5% in January. The construction report showed spending rose 0.1% and adding to positive surprises December was revised higher to show a gain of 1.5%.
The above mentioned economic surprises have allowed the US Dollar to rally slightly and the rally may continue given on how economic reports will come in this week with the biggest report due on Friday when the US reports February’s non-farm payroll report.