USD Strengthens as ISM Manufacturing Hits Highest Level Since 2022

The US dollar received a bullish boost as the ISM Manufacturing PMI surged to its highest reading since May 2022, coming in above the prior month's 52.7 and marking the fifth consecutive month of expansion. Key internals painted a positive picture: new orders jumped to 56.8 from 54.1, production rose to 54.3 from 53.4, and new export orders returned to expansion territory at 50.6 versus 47.9 prior. Employment improved to 48.6 from 46.4, though it remains in contraction. Prices paid eased slightly to 82.1 from 84.6, offering marginal relief on the inflation front but still elevated. The robust manufacturing data supports the case for the Federal Reserve maintaining a hawkish stance, potentially delaying rate cuts further into 2026. For USD pairs, this data reinforces near-term dollar strength, particularly against lower-yielding currencies. Traders should note, however, that the headline figure may overstate momentum, and upcoming employment and inflation reports will be critical for confirming the trend.