The ISM Manufacturing PMI and the US Job Openings data both missed expectations. US Dollar Index slips, but USD/JPY remains firmer.
The Institute for Supply Management (ISM) which publishes US Manufacturing PMI data reported a decline in the index to 58.7 in December. The level was down from the previous period and failed to meet expectations of hitting 60.0. Historically, this figure is also the lowest since January 2021.
The problem of lack of supply of raw materials is the main cause. In the midst of economic recovery from the crisis due to COVID-19, the surge in demand is not balanced with the availability of goods. This condition also triggers the current increase in US inflation.
Meanwhile, JOLTs Job Openings fell from 11.09 million to 10,562 million in November. In fact, analysts estimate the acquisition of 11 million.
"The massive resignations have shown no sign of abating, and have instead set new records. The question is why, and the answers are contradictory," commented Robert Frick, economist at Navy Federal Credit Union, "On the one hand, exhaustion and fear. The fight against COVID continues, but on the other hand, Americans are still convinced to look for jobs that offer higher pay as there are so many job openings today."
Dollar Index Slips, USD/JPY Gets Stronger
After the release of the two economic data above, the US Dollar Index (DXY) slipped 0.15% to 96.08. However, USD/JPY strengthened 0.67% to 116.08, its highest since January 2017. Overall, the Dollar was relatively stable versus the other majors.
Joe Manimbo from Western Union Business Solution observes that USD/JPY is currently more affected by yield movements than other issues. The potential for a Fed rate hike this year fuels risk appetite and is the main catalyst for depressing the Japanese Yen.
"The main point here, indeed (Omicron developments) is still unpredictable. But so far, the market has not felt any indication that it will do any significant disruption to the economic recovery. The main focus will be on central bank policies and how they will push up interest rates," said Manimbo.
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