Flash PMI gives reason to doubt US’s resilience

Preliminary reading of Markit manufacturing PMI dipped to 52.9 in August compared to final reading of 53.8 in July. Analysts were expecting no change.

Key highlights

• Business conditions dropped to 22 months low in August, lowest since September 2013. Output, new orders and employment rose but at much slower pace.
• Latest rise in production volume stands slowest since January 2014.
• While overall orders expanded, export orders dropped again, making the drop fourth in last five months.
• Both input costs and output, pointing to subdued inflation.

PMI reading poses doubts over momentum in US economic recovery. Stronger Dollar, along with global economic slowdown is taking its toll on manufacturers.

Even if policymakers' decide to move ahead with rate hike in September, weaker recovery in US poses doubts over their ability for subsequent rate hikes. The concern was somewhat reflected in latest minutes from FED.

Dollar, which has already a terrible week, especially after FED minutes is down further after the release.

Dollar index is down -0.37% today so far, trading at 95.42.