US ISM Manufacturing December

We have the first tier one data release of 2022 due up over today’s US session. The US ISM manufacturing reading for December will be the main market focus, with traders hoping for some action to get the year going. In terms of numbers, forecasters re looking for the index to fall back to 60 from 61.1 in November. Such a move is unlikely to take the shine off USD too much. However, if we see an upside surprise today, that could well prove to be the catalyst needed to kick USD bulls into gear here. Given the focus on the Fed’s tightening operations, any upside USD data releases are likely to see increased USD buying as we move into Q1.

Where to Trade US ISM Manufacturing?

USDJPY

The rally off the 112. 72 base has seen USDJPY trading higher, with price breaking out above the 115.45 2021 highs. With both MACD and RSI bullish here, the focus is on continued upside. Given the BOJ’s commitment to maintaining an easing presence in the market, while the Fed pursues policy normalisation, the divergence in central bank outlooks favours higher prices near term. JPY is also weakened by better risk sentiment currently as markets look beyond omicron risks and focus on a broader recovery over 2022