USD flows: USD edges lower after softish ISM

Somewhat weaker than expected US manufacturing ISM has pushed the USD lower. The slightly weaker data follows the similarly weaker S&P PMI, but probably won’t impact Fed thinking at the FOMC meeting later. Even so, the fact that the market is only now pricing one Fed rate cut this year makes it hard to see the FOMC leading to higher US yields. The USD risks consequently should be slightly on the downside, although major moves seem unlikely ahead of the employment report and more important non-manufacturing ISM on Friday.