U.S. business activity held steady in September, price pressure picked up, and the dollar rose after PMI data

U.S. business activity held steady in September, but the average price of goods and services rose at the fastest pace in six months, which could suggest that inflation will pick up in the coming months.S & P Global said on Monday that the US composite purchasing managers' index, which tracks manufacturing and services, stood at 54.4 at the start of the month, little changed from its final reading of 54.6 in August. A reading above 50 indicates expansion in the private sector.

The September reading was in line with economic reports such as retail sales this month, suggesting the economy maintained solid momentum in the third quarter. However, uncertainty surrounding the November 5 presidential election took its toll on business confidence. While manufacturing slipped to a 15-month low, the service sector continued to expand steadily. Average prices for goods and services rose at the fastest pace since March, marking the first acceleration in sales price inflation in four months.

(One-hour chart of the US dollar index)

foreign exchange trading platformThe survey showed that the measure of business input prices rose to 59.1 from 57.8 last month, a new high in a year. The output price index rose to 54.7 from 52.9 in August. The Federal Reserve last week cut interest rates by 50 basis points to a range of 4.75% -5.00%, the first reduction in borrowing costs since 2020. Fed Chairperson Powell said the move was intended to show policymakers' commitment to maintaining low unemployment.

The survey's preliminary manufacturing PMI fell to a 15-month low of 47.0 from 47.9 in August. Economists interviewed by Reuters had expected the manufacturing index, which accounts for 10.3 per cent of the economy, to rise to 48.5. The services PMI fell to 55.4 from 55.7 in August, broadly in line with economists' expectations of 55.2.

Dollar indexOn Monday, it rose 0.2% and reached a high of 101.23 during the session, which is exactly where the resistance of the 21-day moving average lies. It closed at 100.93, closing two consecutive trading days higher and closing above the key level of 100.51, which has supported the dollar several times in the past 15 months.Dollar indexThe stabilizing rebound has made gold bulls hesitant.

Michael Green, portfolio manager and chief strategist at Simplify Asset Management, said: "Our main focus is on interest rate expectations, and most people expect the Federal Reserve to take the lead and be relatively more aggressive in cutting rates, which is a reasonable reading historically. Anything that drives the market to adjust expectations closer to the Fed's stance is likely to give the dollar at least some boost."