Global FX Market Summary: EUR, USD March 1st, 2024

The ISM’s February Manufacturing PMI is expected to show a slight increase, but remain below the expansionary threshold, while inflationary pressures persist and a Fed rate cut in June is still possible.

US Manufacturing Activity Expected to Show Modest Recovery

The Institute for Supply Management (ISM) is set to release its February Manufacturing PMI report on Friday. The report is expected to show a slight increase in activity, rising from 49.1 in January to 49.5. However, this figure remains below the 50.0 threshold that indicates expansion in the manufacturing sector. This suggests that the sector is still facing challenges, despite the modest improvement.

Inflationary Pressures Remain Elevated

Another key indicator to be released from the ISM report is the Prices Paid Index. This index is expected to come in at 53.0, which is higher than the January reading of 52.9. This suggests that manufacturers are still facing rising input costs, which could continue to put upward pressure on consumer prices.

Federal Reserve Rate Cut Still on the Table

Despite the recent signs of easing inflation, as evidenced by the Core PCE Price Index coming in at 2.8% YoY in January, market participants continue to expect a rate cut from the Federal Reserve in June. The odds of a 25 basis point cut are currently around 52%. Investors will be closely watching upcoming economic data releases, such as the ISM Manufacturing PMI and the Michigan Consumer Sentiment Index, for further clues about the Fed’s monetary policy stance.

Key Upcoming Economic Data Releases

Here are some of the important economic data releases to watch in the coming days:

  • Friday, March 1st:
    • ISM Manufacturing PMI (15:00 GMT)
    • Michigan Consumer Sentiment Index (15:00 GMT)

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