ISM Manufacturing Index (Jan) Actual 35.6, Expected 35.5, Previous 32.9 (Revised from 32.4)

Release Explanation: Similar to the PMI numbers, it surveys Purchase Managers on their sentiment on orders, hiring, inventories, and deliveries. A number above 50 indicates expansion in the sector while a number below indicates contraction. Split into the Manufacturing Index (above), and then Manufacturing Prices which look at the rate of Inflation when materials and services are purchased. Builds an economic picture of the strength of manufacturing activity ahead of official Government reports. These numbers usually are a pre-cursor to the PMI numbers later in the month. A currency can be very reactive to these numbers as over time they have been a reliable read on Government reports to come.

Trade Desk Thoughts: Manufacturing contracted for a twelfth straight month in January, the Institute for Supply Management said today, but the rates of contraction for many of the sub-indexes declined.

While the report shows improvement, the overall sector is still very weak, said Matthew Carniol, chief currency strategist at Without improvement in the auto and housing sectors, it will be difficult for manufacturing to make much headway.

As a plus to consumers, the price index decreased for a fourth month. Employment, which is still contracting, declined at the same pace as in December. New orders and production contracted at slower rates as did exports and imports.

The report also indicated that the overall economy contracted for a fourth straight month, but that the overall pace of the decline slowed.

Forex Technical Reaction: Stocks and crude futures jumped initially on the news, and the dollar weakened against the higher-yielders as it gained on the yen.