USD, JPY flows: USD slips after ISM, JPY has scope for recovery

ISM manufacturing indices are somewhat less impressive than the S&P PMI manufacturing already released, with then main index and the employment index rising less than expected, although the new orders index was much stronger than expected. The USD has edged a little lower in response, but the orders numbers will be seen as encouraging so USD downside likely modest unless we see a bigger reversal in the sharp rise in yields seen overnight. But the rise in USD/JPY already looked overdone, and with equities already lower, there is scope for the JPY to stage a broader recovery.