Global macro overview for 03/07/2017

Global macro overview for 03/07/2017:

The ISM Manufacturing data from the US might confirm another month of a moderate growth at the year's midpoint. Market participants expect ISM to increase slightly from 54.9 points to 55.1 points, which is far away from any impressive level of performance, but still is a solid and steady pace of growth. More importantly, the ISM index is still above the fifty level, that separates the expansion from contraction.

The ISM index has been rising from the level of 49.5 in August 2016 to the level of 57.5 in late February 2017. Since then the index is slightly deteriorating from its peaks, but it is still above the fifty level. This data is considered a very important and trusted economic measure, so it might be a little worrying if it starts to slide, despite the solid and steady numbers. The recent The Atlanta Fed's downgrade in GDP expectations from 2.9% to 2.7% in the second quarter might be the first indication, that Q2 will not improve over the Q1 as big as anticipated. The expectations for a stronger GDP rebound have been fading in recent weeks. The market will be eager to learn if today's first look at the ISM index for June will also issue a comparatively cautious assessment. If the number would beat the expectations, it might trigger a solid bounce off the US Dollar from the current oversold levels.

So, let's now take a look at the US Dollar Index technical picture on the H4 time frame. The bulls are trying to bounce back from the important support at the level of 95.91 and the oversold market conditions and growing bullish divergence support this move. The next technical resistance is seen at the level of 96.32.

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