Dollar Strength: Short Lived on Disappointing PMI?

• By David Goodboy
• On 8:11 am EDT, Thursday October 29, 2009

David Goodboy is Vice President of Business Development for a New York City based multi-strategy fund.

The Event:

At 9:45 on Friday, October 30th, the research firm Kingsbury International releases its Chicago Purchasing Managers Index (PMI) figure.

Description:

This index is based on a survey of the Chicago area purchasing managers asking respondents to rate business conditions, new orders, prices and employment among other economic sensitive topics. The idea being that businesses, particularly purchasing managers are on the front line to changes to the economy hence would be the first to know about improvement and or declines. It is a diffusion index with above 50 indicating expansion and below 50 showing economic retraction. If the number beats estimates, it's considered to be bullish for the currency, missing is bearish. Interestingly, this is the only release that traders can legitimately buy rights to obtain prior public dissemination. Subscribers to www.kingbiz.com receive the number 3 minutes prior to the public.

Trader Take:

Is there an edge to purchasing early rights to the Chicago PMI figure? I personally doubt that an edge would exist for most traders; however, watching the market change during the 3-minute period would make an interesting study. The USD has recently been surging against the Euro with the pair dropping to below the 1.4700 area. The next major technical support rests at 1.4500. However, the Euro has gained a bit of strength on the eve of the GDP release. The PMI is expected to be 48.6, still shy of the critical 50 level.

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Buzz up!