ISM Manufacturing Index - Indicates - The Dollar is Bottoming.
The Purchasing Managers Index is a diffusion index summarizing economic activity in the manufacturing sector in the US. The index is based on a survey of manufacturing supply executives conducted by the Institute of Supply Management. Participants are asked to gauge activity in a number of categories like new orders, inventories, and production and these sub-indices are then combined to create the PMI. A PMI above 50 would designate an overall expansion of the manufacturing economy whereas a PMI below 50 signifies a shrinking of the manufacturing economy.
This index is handy and indicative of corporate profits because purchasing managers are in the best position to assess the ebb and flow of business conditions. The manufacturers they work for must respond quickly to changes in demand, ramping up or scaling back purchases of materials they use in anticipation of demand for their finished products.
The correlation between the PMI and DXY is not perfect. I would say 65% of the time when PMI falls then DXY rises.
This index is handy and indicative of corporate profits because purchasing managers are in the best position to assess the ebb and flow of business conditions. The manufacturers they work for must respond quickly to changes in demand, ramping up or scaling back purchases of materials they use in anticipation of demand for their finished products.
The correlation between the PMI and DXY is not perfect. I would say 65% of the time when PMI falls then DXY rises.
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Here is a video of Raul Paul using the ISM to determine market cycles: www.youtube.com/watch?v=SDoIbFuK...
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Another video worth checking out: www.youtube.com/watch?v=Aiay8I5I...
