US stock markets are a tad lower following a softer than expected Chicago PMI. Economists projected a slight decline in Chicago PMI to 53.1 from 54.2. However, the outcome was 49.7, indicating a contraction in Chicago manufacturing. The S&P 500 traded lower, but the Nasdaq 100 took a bigger hit. EURUSD has barely reacted on the news.
80 percent of Chicago firms surveyed in the PMI said that they had been negatively impacted by the trade tariffs.
On Monday, the US ISM indicator is due, and if it follows the outcome of most PMI figures, then it looks like the index is set to drop once again, the question is by how much.
The S&P 500 could still be in the process of carving out a head and shoulders pattern as we also mentioned earlier this week, and the latest soft data is strengthening the case that this bearish pattern will be triggered. A break to the neckline level at 2909.6, could send the S&P 500 towards the June 18 low at 2884.6, followed by the June 13 low at 2873, and the head and shoulders pattern target at 2860.4. If the S&P 500 indeed heads lower then this should weigh on the USDJPY that is bearish below 108.79.Don’t miss a beat! Follow us on Twitter.
EURUSD has been trading relatively unchanged following the news; the price is currently supported just above the June 17 low of 1.1345. In the price trading below this level, the market could reach the 1.32 level which the 61.8% correction level of the bull leg from the June 20 low at 1.1268 to this week’s high of 1.1413.