Today at 6:45 PM Dubai time, US PMI data for the services sector will be released, and markets are anticipating what the real reading will show relative to what is expected and the previous rate.
Expectations indicate an increase to 47.3 compared to the previous reading of 46.8, meaning that the index will continue to remain below 50 for the ninth consecutive month.
This is a leading indicator of the economic health, especially with regard to services, and a reading below 50 indicates a contraction in this sector. PMI, in addition to many other economic indicators, is a measure that the Fed will rely on before its upcoming meeting in March to determine its next monetary policy decision.
As a result, investors are watching whether this indicator will provide additional support for the Fed to tighten monetary policy further, should the reading come in higher than expected. With other indicators coming in stronger than anticipated, this would be a justifiable case for the Fed to raise rates further.
It is expected that financial markets will remain volatile following the data release, and the initial market reaction, regardless of the nature of the real reading, may be sharp and volatile at first before markets return to stability.
Therefore, it is important to remember that traders have different ideas and convictions in the way they interpret the information released and prices cannot move 100% according to that information.
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