US Dollar Enters Consolidation Mode After May’s PMI Report
The DXY index, which measures the performance of the US dollar shows it ending the day’s trade at 105.10 on Friday. The US dollar is trading sideways today after S&P Global released the preliminary May Manufacturing and Services PMI reports. The flash estimates PMI reports were published for Germany, the Eurozone, the UK, and the US.
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The reports show that the S&P Global Composite PMI improved to 54.4 from 51.3 in May’s flash estimate. The development indicates that business activities in private sectors are continuing to grow at a much faster rate than in April. Therefore, the US dollar could have better chances of bouncing back in the charts as businesses remain in profits.
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US Dollar Today: USD Hits 105 Post May’s PMI Report
The US dollar slumped to 104 levels two weeks ago and experienced buying pressure from hedge funds during the dip. This cemented the USD’s resistance level making a bounce back easier post the PMI report. In addition, the PMI report shows that the S&P Global Manufacturing increased from 50.9 to 50.0 during the same period. The development indicates a brief increase in the manufacturing sector as consumerism increases.
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Overall, the S&P Global Services PMI rose to 54.8 in May from 51.3 last month. Therefore, the US dollar has a better chance of sustainably scaling up in the charts as the PMI reports are mostly positive.
The growth in manufacturing and consumerism could reflect positively on the US dollar and the Pound and Euro. “The US economic upturn has accelerated again after two months of slower growth, with the early PMI data signaling the fastest expansion for just over two years in May. The data put the US economy back on course for another solid GDP gain in the second quarter,” said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.