A1 Trading Company

February 22, 2024

What Higher PMI Can Do For USD, Indices, Gold

Frank Cabibi

This morning, the US will release their latest services and manufacturing PMI data. Here is what a higher or lower number could mean for USD, indices and gold.

EdgeFinder Analysis

GBPUSD is now a +9 on the EdgeFinder. This strong bullish reading is helped out by the recent change in the trend reading category that went up to a +2 overall suggesting a strong uptrend. UK PMI data came in almost unchanged except for a slight tick up in manufacturing.

The pair is now reacting negatively towards this news. If the US reports higher than expected PMI, the pair could react more negatively. However, a weaker reading in US PMI data could cause the opposite reaction for the pair.

Gold is down on the day before US PMI which could be an indication that investors are anticipating a higher number this month. COT also sold gold in last week's report possibly hoping for a stronger dollar reading in the next week or so.

This is also a technical indicator on the 1D timeframe for gold to test resistance on a rising trend line. If price cannot break above this level, it may look to retrace down towards the $2000s level.

Indices are getting a weaker reading on the EdgeFinder at +4. Indices are up regardless of the PMI data coming out and this could likely be due to earnings in the semiconductor sector. Nvidia reported their quarterly earnings last night and beat all analyst expectations.

Forward guidance was also another helpful factor for the stock's price as AI sales demand has greatly increased business in that area of the market. It is likely that NAS100 will be carried more by this news than PMI data.

Retail Spotlight

Retail is strongly bearish on the indices while being mixed on gold and the major USD pairs. USOil and AUDUSD are the assets that retail traders are buying.

Smart Money Spotlight

Smart Money is getting increasingly long on gold while retail is continuing to short the metal. Price action, however, has been relatively choppy as it battles between the $1980s and the $2020s.

Fundamental Spotlight

The trend in Manufacturing PMI has shown some increase as the number is now above 50 indicating economic growth. The actual results came in higher for manufacturing and lower for services at 51.5 and 51.3 respectively. Mixed data may not have a tremendous impact on the USD however, gold, USD and NAS100 are having a positive initial reaction to this news.

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