ISM Manufacturing data increases for 5th straight month in December. USD on defensive to start the week as Stocks gain.

By CountingPips.com

U.S. Manufacturing data, released today by the Institute for Supply Management, showed that manufacturing activity increased more than expected and grew for the fifth straight month in December. December’s ISM Report On Business index reading for economic activity was at 55.9 following November’s reading of 53.6 and marked its highest reading since early 2006. A score above 50 percent is considered to be growth and less than 50 percent is considered to be contraction in that sector. Market forecasts were predicting a reading of 54.3 for the month of December. The report also said that the overall economy grew for the 8 straight month.

Norbert J. Ore, chairman of the ISM Business Survey Committee, stated in the report that, “The manufacturing sector grew for the fifth consecutive month in December as the PMI rose to 55.9 percent, its highest reading since April 2006 when it registered 56 percent. This month’s report is quite strong as both the New Orders and Production Indexes are above 60 percent. The sector may be benefiting from an excessive destocking cycle as indicated by the recent performance of the Customers’ Inventories Index. Customers’ inventories have been ‘too low’ for nine consecutive months, and this month’s index is the lowest reading since the inception of the index in January 1997. Overall, the recovery in manufacturing is continuing, but there are still some industries mired in the downturn as evidenced by the seven industries still in decline.”

The indexes for new orders, production, employment, supplier deliveries, prices, imports and inventories all showed increases for December while backlog of orders, exports and customer inventories showed decreases for the month. The new orders index increased by 5.2 points to a reading of 60.3 in December and has increased for the six consecutive months.

US Dollar falls in Forex Trading.

The US Dollar has been on the defensive to start the week in forex trading against the other major currencies. The dollar has fallen today versus the euro, Swiss franc, Australian dollar, New Zealand dollar, Canadian dollar and the Japanese yen while showing a slight gain against the British pound so far in the U.S. trading session at 12:23pm EST.

The US stock markets, meanwhile, have started the week off with a bang with the Dow Jones rising by over 150 points, the Nasdaq increasing by close to 40 points and the S&P 500 up by over 15 points.  Oil has traded higher to $81.28 while gold has jumped by $25.00 to trade at $1120.20 per ounce.

AUD/USD Chart – The Australian Dollar gaining sharply today versus the US Dollar in forex trading. The AUD/USD has broken out of its upward trending price channel today to surpass the 0.9100 level after falling to the recent low of 0.8734 on December 23rd.