Asian shares traded mixed during Wednesday’s session, following Tuesday’s reports from the U.S. Institute for Supply Management (ISM) that the non-manufacturing purchasing manager index (PMI) fell from 55.5 in July to 51.4 in August, its lowest point since 2010. Estimates had placed the PMI near 55. In contrast to Asia’s mixed stocks, U.S. stocks traded up on Tuesday as prospects of a September hike waned following the ISM announcement.
According to Anthony Darvall, chief market strategist at easyMarkets, this number is “a serious miss and all but wipes out the chance of a Fed rate hike in September.” The ISM numbers, in conjunction with last Friday’s disappointing non-farm payroll report, caused many market hawks to question whether a rate hike would be forthcoming before December, as they’d originally hoped.
Currency Responses to the ISM Report
The dollar/yen pair fell below the 103 levels that it held for the past three sessions, touching 101.39 before noon on Wednesday, after declining 1.38 percent on Tuesday. The U.S. dollar also fell more than one percent against the Australian dollar, euro and pound, as well as other currencies.
The British held steady at 1.3416, near 8-week highs, while the yen also gained additional support following the recent BOJ announcement which hinted towards monetary easing as part of future economic policy.