The US Dollar (USD) received support from recent Federal Reserve (Fed) data, according to Brown Brothers Harriman’s Elias Haddad. The May ISM manufacturing index, released yesterday, rose to a four-year high of 54.0, up from 52.7 in April. This improvement was driven by a faster expansion in new orders and a slower contraction in employment, signaling a more restrictive Fed policy stance and a firmer USD [1].
The Prices Paid sub-index within the ISM report unexpectedly dipped to a two-month low at 82.1, compared to 84.6 in April. However, this level still suggests ongoing upside risk to inflation [1]. The labor market remains a key focus, with the upcoming April Job Openings and Labor Turnover Survey (JOLTS) report highlighted as crucial for assessing downside risks. In March, the JOLTS report showed the hiring rate rose to a two-year high, while layoffs remained low and stable. If these trends persist, they would significantly ease downside risks to the US labor market and help stabilize the outlook for the Dollar [1].
No specific market reactions or analyst forecasts beyond these observations were provided in the article.
CONCLUSION
Recent Fed data, particularly the strong May ISM manufacturing index, supports a firmer US Dollar and a more restrictive policy stance. Continued strength in labor market indicators, such as hiring rates and low layoffs, could further stabilize the Dollar's outlook.