October US S&P Global PMI expected to signal easing business activity

• October is expected to bring a slight slowdown in US business activity. Expansion should nevertheless remain firmly on track.
• Following September’s strong results, both manufacturing and services survey readings are projected to soften.
• Stronger-than-forecast business activity could bolster the US Dollar by strengthening expectations of further Fed rate hikes.

October’s preliminary United States (US) S&P Global Purchasing Managers Indices (PMIs) are due on Friday. Ahead of next week’s Federal Reserve (Fed) monetary policy meeting, the release will offer a fresh assessment of the world’s largest economy.

Private-sector business activity is tracked through three measures in the report: the Manufacturing PMI, Services PMI and Composite PMI. Expansion is signalled by readings above 50; results below that threshold indicate contraction.

Despite sustained inflationary pressures and high borrowing costs, recent US data continue to point to resilient economic activity as the October surveys approach. Investors will scrutinise the results for evidence of weaker growth or renewed price pressures, either of which could shape the Fed’s monetary policy outlook and the US Dollar (USD).

October S&P Global PMIs: Slower Growth Expected

A modest easing in US private-sector activity is forecast for October after September’s particularly strong results. For the S&P Global Manufacturing PMI, the consensus is a slight fall from September’s 55.9 to 55.6. The Services PMI is projected to slip from 58.8 to 57.9. September’s Composite PMI, meanwhile, registered 58.4, underscoring robust private-sector growth in the US.

Even with momentum expected to soften in both sectors, the forecasts sit comfortably above the 50 expansion threshold. The anticipated readings therefore suggest continued healthy growth in the US economy.

Persistent price pressures add to the significance of this release. Inflation has exceeded expectations in recent US data, while Retail Sales and labour market indicators still point to resilient domestic demand.

Following September’s 25-basis-point (bps) increase, the Fed is widely expected to hold interest rates steady at its meeting on 28 October. The CME FedWatch tool nevertheless shows that investors have fully priced in another rate hike in December.

October Flash US S&P Global PMIs: Release Time and EUR/USD Implications

Friday at 13:45 GMT marks the release of October’s S&P Global Manufacturing, Services and Composite PMIs. As investors position ahead of the Fed’s 28 October monetary policy decision, the figures could spark volatility in both the US Dollar and EUR/USD.

Expectations of further Fed rate hikes over the coming months could strengthen if the report exceeds forecasts. US Treasury yields and the US Dollar would likely benefit in that scenario, potentially putting EUR/USD under pressure.

A more pronounced slowdown than expected, especially in services, could instead prompt concerns over the durability of US economic growth. Softer PMI results could lead investors to reconsider the prospect of additional monetary tightening, weighing on the Greenback while lending support to EUR/USD.

A broad match with forecasts, however, could produce only a relatively muted market response. Both manufacturing and services activity are still expected to remain firmly in expansion territory.

Investors will examine Friday’s PMIs for confirmation of US economic resilience or evidence of slowing activity, with another December Fed rate hike already largely priced in. An upside surprise could strengthen expectations of further monetary tightening. Disappointing results, by contrast, could raise questions about the strength of growth and put pressure on the US Dollar.

Below the 100-period Simple Moving Average (SMA) at 1.1223 and the 200-period SMA at 1.1213, EUR/USD retains a modest bearish bias on the one-hour chart. The pair is edging along just above nearby price support. With the Relative Strength Index (14) around 40, the signal is one of fading bullish momentum rather than outright oversold conditions. Downside risks therefore persist while those moving averages constrain advances.

The horizontal level near 1.1190 provides initial downside support, followed by lower support levels at 1.1150 and 1.1114. An advance would first encounter resistance at the 200-period SMA at 1.1213, then the 100-period SMA at 1.1223. Beyond those averages, reclaiming the stronger barriers at 1.1260 and 1.1285 would be necessary to temper the prevailing bearish bias.

(The technical analysis of this story was written with the help of an AI tool. Find out more.)