Market Analytics and Technical Considerations
Key Points
The November report indicated that rising economic development and employment had boosted the rate of growth. Following the declines of April and May 2020, 13 industries also recorded growth, and the aggregate index increased for the 30th consecutive month. In fact, the services sector has grown for 154 months in a row with the exception of two, demonstrating the robustness of the US economy.
Principal changes from the October report:
Activity in the economy, Employment, Inventories and Imports
Pricing: In addition to the positive change in the CPI on November 10th, the prices component of the report was found to decline from 70.7 to 70 in November. When those statistics are revealed on Friday, PPI might potentially contribute to the discussion over inflation.
Given that the US services sector is the strongest in the world’s biggest economy, it seems sense that it needs a significant amount of attention. After Q2 saw two consecutive quarters of negative GDP growth, concerns about the health of the US economy grew. Even though this technically qualified as a recession, many pundits, including the US Treasury Secretary, opted to discount the idea and cited the abnormally low rate of unemployment as evidence.
And since, the GDP growth has experienced a dramatic reversal, leading to a positive Q3 statistic and the Federal Reserve tracking Q4 for yet another good quarter, possibly fueled by spending during the holiday season.
DXY IMMEDIATE MARKET RESPONSE
The positive report caused the US dollar index (DXY) to increase since it casts doubt on the recent “top inflation” story that has been going around since the lower CPI print earlier this month, which caused a USD fall in the value.
S&P 500
After the release of the PMI data, the S&P 500 continued to trend slightly lower. superior services The economy may not be cooling as the Fed had hoped, according to PMI statistics, and if other data points line up, the Fed may decide to raise rates more quickly at its upcoming meetings. The ‘prices’ subset of the statistics indicates a 0.7 reduction, which is interesting to note because it actually relates to the effects of earlier rate increases.
One of the primary winners of the dollar’s drop was the USD/JPY after it reached extraordinarily high levels. A countertrend move upward, off the blue zone of support, was produced by the PMI data.
