US S&P Global Composite PMI rose to 52.1 in May’s flash estimate from 50.6 in April, showing that the business activity in the US’ private sector continued to expand at an accelerating pace.
S&P Global Manufacturing PMI improved to 52.3 from 50.2 in this period, while the Services PMI rose to 52.3 from 50.8.
Assessing the survey’s findings, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, stated, “Business confidence has improved in May from the worrying slump seen in April, with gloom about prospects for the year ahead lifting somewhat thanks largely to the pause on higher rate tariffs.”
Regarding the input inflation in the private sector, he added, “The overall rise in prices charged for goods and services in May was the steepest since August 2022, which is indicative of consumer price inflation moving sharply higher.”
Market reaction to US PMI data
The US Dollar Index (DXY) edged slightly higher with the immediate reaction to the upbeat PMI data and was last seen rising 0.15% on the day at 99.85.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.32% | 0.02% | 0.10% | 0.15% | 0.36% | 0.66% | 0.33% | |
| EUR | -0.32% | -0.29% | -0.24% | -0.17% | 0.03% | 0.34% | 0.00% | |
| GBP | -0.02% | 0.29% | 0.06% | 0.13% | 0.35% | 0.63% | 0.31% | |
| JPY | -0.10% | 0.24% | -0.06% | 0.05% | 0.27% | 0.54% | 0.22% | |
| CAD | -0.15% | 0.17% | -0.13% | -0.05% | 0.22% | 0.51% | 0.18% | |
| AUD | -0.36% | -0.03% | -0.35% | -0.27% | -0.22% | 0.30% | -0.04% | |
| NZD | -0.66% | -0.34% | -0.63% | -0.54% | -0.51% | -0.30% | -0.33% | |
| CHF | -0.33% | -0.01% | -0.31% | -0.22% | -0.18% | 0.04% | 0.33% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
This section below was published as a preview of the US S&P Global PMI data at 08:00 GMT.
- The S&P Global advanced May PMIs are expected to show a slight dip in the manufacturing sector.
- Markets expect the Federal Reserve to cut rates in September by 25 bps.
- EUR/USD keeps the trade in the area of three-year highs past 1.1500.
S&P Global will release the preliminary May Purchasing Managers’ Index (PMI) for the United States at 13:45 GMT on Thursday.
The report comprises three measures — the Manufacturing PMI, the Services PMI and the Composite PMI (a weighted blend of the two) — each calibrated so that readings above 50 denote expansion and those below 50 signal contraction. Published well ahead of many official statistics, these monthly snapshots assess everything from output and export trends to capacity utilization, employment and inventory levels, and are largely seen as reliable leading economic indicators.
In April, the Composite PMI edged lower to 50.6 from 51.2 in March, pointing to a loss of growth momentum in the private sector’s economic activity. In this period, the Services PMI declined to 50.8 from 51.4, while the Manufacturing PMI fell to 50.2 from 50.7. Assessing the survey’s findings, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, noted that PMI data for April highlighted a marked slowing of business activity growth at the start of the second quarter, accompanied by a slump in optimism about the outlook. “At the same time, price pressures intensified, creating a headache for a central bank which is coming under increasing pressure to shore up a weakening economy just as inflation looks set to rise,” Williamson added.
What can we expect from the next S&P Global PMI report?
Market expectations suggest that PMI readings in May will change a little. The Services PMI is forecast to hold steady at 50.8 and Manufacturing PMI is seen ticking down to 50.1 from 50.2.
Previewing the PMI data, analysts at TD Securities said: “The flash PMIs for May might reflect some optimism in their responses following the recent trade-war détente between the US and China.”
“Note that the survey is conducted during the two middle weeks of the month. With that said, while we are projecting an increase in the services index to 52.0, we look for a decline in the Manufacturing PMI to contraction territory,” analysts added.
When will the March flash US S&P Global PMIs be released, and how could they affect EUR/USD?
The S&P Global Manufacturing, Services and Composite PMIs report will be released on Thursday at 13:45 GMT and is expected to show a marginal expansion in the US private sector’s business activity.
In case both PMIs come in above 52, the immediate market reaction could boost the US Dollar (USD). Conversely, the USD could come under renewed selling pressure if PMIs drop below 50 in May.
The underlying details of the PMI surveys could drive the USD’s valuation if headline readings arrive close to market estimates. In case the publication hints at a strengthening input inflation, investors could see that as a sign pointing to a Federal Reserve (Fed) policy hold in the upcoming meetings, or a hawkish revision to the interest rate projections in June’s revised Summary of Projections. In this scenario, the USD is likely to outperform its rivals in the near term. On the flip side, the USD could struggle to find demand and help EUR/USD push higher if the survey highlights a significant reduction in the private sector’s payrolls.
Eren Sengezer, European Session Lead Analyst at FXStreet, shared a brief overview of EUR/USD’s short-term technical outlook:
“The Relative Strength Index (RSI) indicator on the daily chart climbs toward 60 after spending the previous week below 50, reflecting a buildup of bullish momentum. Additionally, EUR/USD closed above the 20-day Simple Moving Average for the first time in two weeks on Tuesday.”
“On the upside, 1.1500 (static level, end-point of the January-April uptrend) aligns as a strong resistance level before 1.1575 (April 21 high) and 1.1670 (static level from October 2021). Looking south, supports could be spotted at 1.1200 (Fibonacci 23.6% retracement of the uptrend), 1.1120 (50-day SMA) and 1.1015-1.1000 (Fibonacci 38.2% retracement, round level).”
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022.
Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
(This story was corrected on May 22 at 08:39 GMT to say in the first bullet point that advanced PMIs are for May, not April.)
