US October PMIs seen easing slightly but staying in growth territory
S&P Global's preliminary US October Manufacturing, Services and Composite PMIs are due Friday at 13:45 GMT, with forecasts pointing to a mild slowdown from September's strong readings. The data land days ahead of the Fed's October 28 meeting and could move EUR/USD and the US Dollar.
Forecasts call for the Manufacturing PMI to slip to 55.6 from 55.9 in September, and the Services PMI to ease to 57.9 from 58.8. The Composite gauge, which combines both sectors, stood at 58.4 last month. All projected figures remain well above the 50 mark that separates expansion from contraction, pointing to continued solid growth in the US private sector.
The release follows a run of data showing persistent inflation alongside resilient consumer spending and a firm labor market. That backdrop has reinforced market expectations that the Fed will hold rates steady at its October 28 decision, after lifting them by 25 basis points in September, while pricing in a further hike in December according to the CME FedWatch tool.
A stronger-than-expected PMI print could bolster the case for additional Fed tightening, which would tend to lift US Treasury yields and the US Dollar while pressuring EUR/USD. A weaker reading, particularly in services, could raise doubts about growth momentum, cool rate-hike expectations and weigh on the dollar, supporting the euro pair. If the numbers land close to forecasts, the market reaction may be limited given both sectors are still expected to show clear expansion.
Why it matters for markets: The PMI readings are a timely gauge of US economic momentum ahead of the Fed’s policy meeting. Stronger-than-expected data tend to support Fed rate-hike expectations, the US Dollar and Treasury yields, while softer figures can ease those expectations and weigh on the dollar, affecting EUR/USD and broader risk sentiment.
Source: FXStreet