FXStreet (Delhi) – Derek Halpenny, European Head of GMR at MUFG, notes that the US ISM manufacturing index fell below the 50.0 level yesterday, raising concerns over the health of the US economy as we approach the key FOMC meeting on 16th December. Key Quotes “The US dollar has corrected weaker, reinforced by comments from Chicago Fed President Evans who stated he was “nervous” about raising rates this month. But there is nothing new in the events from yesterday. Evans is one of the most dovish members of the FOMC and there has been a widening dichotomy between the manufacturing and non-manufacturing sectors in the US (see below) that the FOMC is well aware of and will hence be much more focused on developments related to consumer spending and jobs and wage growth.” “The ADP report this afternoon is likely to confirm that jobs growth has remained robust with the consensus suggesting a gain close to 200k. That type of growth will ensure that the services side of the US economy remains robust and that really is the catalyst for the FOMC taking action on 16th December.” “We are not surprised the US dollar has lost momentum and is partially reversing recent gains – we have a number of big risk events on the immediate horizon and we are close to technical resistance levels for the US dollar. We don’t agree that it necessarily points to everything being priced. We think there are many market participants waiting on the sidelines not willing to take on additional risk now but will look to add or re-establish positions once the central bank action has been taken and greater clarity on the outlook exists.” “One of the big risk events comes today with Fed Chair Yellen speaking to the Economic Club of Washington (and tomorrow she will give testimony to the Joint Economic Committee of Congress). With the jobs data on Friday and with the market close to fully priced for a rate increase we do not see Yellen providing anything new for the markets today, or tomorrow for that matter. She will likely stick to the script by stating that incoming data is showing progress toward achieving their mandated goals.” For more information, read our latest forex news.