US manufacturing numbers turn the tide around for the USD

If you have followed our live market updates, you must have read our post yesterday. We talked there about how we´re living in uncertain times with a lot of contradiction between different economies, between different sectors of the same economy as well as between economic data releases for the same sector in two consecutive weeks/months.

You just cannot bet on anything these days, you can´t trust anything or any trends. You see a positive trend for several weeks/months, only to see everything reverse in the next data releases. This has been the theme for so long now and that´s the reason the FED has been hesitant to raise the interest rates.

The US economic data today is a prime example of that. The unemployment claims and the labor costs (wages) numbers released a few hours ago showed that the employment sector is quite upbeat. Less than two hours later the construction spending for July falls flat and the ISM manufacturing numbers showed that this sector contracted in August.

Add to that the fact that the Auto sales numbers from all the big car producers in the US, which were just released, missed  the expectations. In fact, sales in five out of six declined from the previous month. Only Fiat Chrysler had higher sales, still, less than the expectations.

Only a week ago, the durable good orders led the forex market to believe that the US consumer had bounced back and has now totally recovered from the 2008 financial crisis. The FED chair Yellen made a couple of hawkish comments regarding the improved economic conditions and a possibility of an interest rate hike the day after. 

Now, a week later the consumer is showing signs of weakness since car sales are declining, the building firms are not spending anymore and the manufacturing sector has contracted in August. It´s a tough job being a central banker. What would you do if you were in Yellen´s shoes right now? Would you hike the interest rates in the September meeting or wait for more evidence that the economy is improving?  

We´re hoping that the 50 moving average in the h1 USD/JPY forex chart will provide enough support to stop the decline and turn it around

Meanwhile, the USD has lost the ground under its feet and has tumbled about 60-70 pips. Our AUD/USD sell forex signal is still alive and we spotted an opportunity on this USD decline to open a buy forex signal in USD/JPY.