Read Larry Connors' blog – Short Term Trading Strategies
At 12:00 P.M. EST, the Philadelphia Federal Reserve releases its survey of manufacturers in the Third Federal Reserve district. The survey posses questions concerning business conditions and general sentiment among the recipients.
Conducted every year since 1968, the Philly Fed Survey is closely watched by Forex traders as a predictive precursor to the ISM manufacturing number. The number is based on a scale with zero being the centerline point. Numbers above zero are considered positive in terms of growth, while those below zero are negative. The results are the difference between the percentage of positive and negative scores.
The figures have been negative for growth over the last nine months. However, a slight uptrend seems to be in effect with July being -16.3% and August -12.7%. If this trend continues into September, it could add to the strengthening dollar causing the EUR/USD pair to accelerate on the downside. Should there be a surprise with an extreme increase in a negative reading, it has the potential to slow down or even reverse the dollars strength in the short term.
As you know, the Federal Reserve's interest rate decision to keep rates steady, when a cut was expected, has added some weakness to the dollar. However, today, the dollar appears to be strengthening against the EUR once again. Forex traders should watch the Philly Fed Survey very closely for clues on the ISM and potentially a market shocking surprise!
David Goodboy is Vice President of Marketing for a New York City based multi-strategy fund.
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