If the US ISM non-manufacturing index for August, which will be announced tonight, rises, indicating the expansion of the service industry and outperforming the market, it means that the US dollar may maintain its upward trend.
In the past 10 years, the service industry has outperformed the commodity industry by at least 2.5 percentage points for four periods of at least 6 months, resulting in an average appreciation of the US dollar by 4%. In July, the US ISM non-manufacturing index fell from 52.7 to 52.5, lower than the expected 53, but still higher than the boom-bust line of 50. The relevant data indicates that consumer demand for services remains strong.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/1b9e0984-6789-4954-a179-99cfbf70baf7.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/1b9e0984-6789-4954-a179-99cfbf70baf7.png"/>
The US dollar has risen for the eighth consecutive week, marking the longest continuous upward trend since 2005. Influenced by the news that Saudi Arabia and Russia will extend the oil supply restriction measures beyond expectations until the end of the year, oil prices have risen for two consecutive weeks, further boosting the US dollar to its highest level in nearly 6 months.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/ef5951b1-71fc-4a5a-82ac-d39c3331a6ae.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/ef5951b1-71fc-4a5a-82ac-d39c3331a6ae.png"/>
The US ISM manufacturing index for August remains in the contraction zone and has been in contraction for 10 consecutive months. The US non-farm payroll data for August, which was announced last Friday, once again exceeded expectations, sending a signal of cooling in the US labor market and reducing the possibility of a Fed rate hike.
Data from the Organization for Economic Cooperation and Development (OECD) shows that the service industry accounts for more than two-thirds of global GDP. For the United States, the service industry has already recovered to become the dominant sector in the domestic economy. However, trade slowdown and monetary tightening by the Federal Reserve have put pressure on commodity activities and prices, making the divergence between the service and commodity sectors more pronounced.
Adarsh Sinha, Co-Head of Asia FX and Rates Strategy at Bank of America, is bullish on the US ISM non-manufacturing index for August: &#34;Whether it is employment growth, sticky inflation, or consumer spending, this resilience is mainly driven by the service industry,&#34; he believes, &#34;A significant slowdown in the service industry is necessary, even if it is not enough to cause a sustained depreciation of the US dollar.&#34;
According to the analysis by the strategy analyst at Bank of America, since the beginning of 2022, 80% of the reasons for the appreciation of the United States can be attributed to the policies of the Federal Reserve towards other regions of the world.

The performance of the service industry is putting pressure on the US dollar and may change the policy outlook.

Will the US dollar continue to rise? Tonight's data is crucial.