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ISM nonmanufacturing PMI for June 48.8 versus 52.5 estimate

Prior month 53.8business activity index 49.6 versus 61.2 last monthemployment 46.1 versus 47.1 last monthnew orders 47.3 versus 54.1 last monthprices paid 56.3 versus 58.1 last monthsupplier deliveries 52.2 versus 52.7 last monthinventories 42.9 versus 52.1 last monthbacklog of orders 44.0 versus 50.8 last monthnew export orders 51.7 versus 61.8 last monthimports 44.0 versus 42.8 last monthinventory sentiment 64.1 versus 57.7 last month

The ISM nonmanufacturing is the lowest in four years. Looking at some of the changes there are some pretty significant declines including new orders, backlog of orders, new export orders.

What are respondents saying according to the ISM?

“Sales and traffic remain soft compared to last year. High gas prices in California and constant news about inflation and restaurant menu prices are culprits.” [Accommodation & Food Services]“Costs seem to have stabilized but are still higher. The company is holding steady to see what the election will hold.” [Construction]“Currently, our operations are normal, but we are experiencing slightly higher costs due to the increase in fuel. We are at the end of our fiscal year, when an increase in expenditures is typical.” [Educational Services]“Steady, with no major shifts in pricing or availability of services.” [Finance & Insurance]“Demand for services has moderated after near-record patient levels in the last month.” [Health Care & Social Assistance]“We are still experiencing supply chain challenges with the increased cost of chemicals, as well as the domestic and overseas freight costs associated with them.” [Management of Companies & Support Services]“Slightly higher prices across the board, but less pricing pressure for some items. Still long lead times for heavy equipment, fire apparatus, ambulances and the like.” [Public Administration]“Inflation continues to be a general concern for both purchasers and sellers. For example, with inflation continuing, will customers have enough discretionary funds to spend?” [Retail Trade]“Supply issues have calmed down. Prices on many products remain high, with no sign of decreases.” [Utilities]“Market seems to be slowing in June. This is complicated by increased ocean freight rates and tight container bookings.” [Wholesale Trade]

The US dollar has moved lower along with yields.

2-year yield 4.695%, -4.4 basis points10 year yield 4.372% -6.4 basis points30-year yield 4.543% -6.5 basis points

In the US dollar :”

The USDJPY is trading below its 100-day moving average for the first time since June 14. The moving average comes in at 161.218. Stay below is more bearish.The EURUSD is extended above the cluster of moving averages between 1.0787 and 1.0794, and above eggs swing area above 1.08036. The current price trades at 1.0814 – its highest level since June 13.

This article was written by Greg Michalowski at www.forexlive.com.

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