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The US dollar has been losing ground the last several days thanks to a combination of factors. There is a chance that the trend could continue after the avalanche of data this week.
Improving risk sentiment naturally weighs on the world’s reserve currency. Coupled with the Fed’s effective announcement that they would allow inflation to go higher than the target, it’s a recipe that’s likely to also push stocks higher.
When going over the ISM data this time around, focusing on the non-manufacturing component might give us better insight into how the market will evolve in the near term.
The current recession has been primarily due to the services sector having to close. This is something that the ISM non-manufacturing data measures more accurately.
This is especially true in the key month of August. During the month, businesses were breathing a sigh of relief after the second wave peaked late in July.
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