The US economy is not growing too fast. The largest sector, services, has seen a slowdown in May with 55.7 points, below 57 expected. The drop includes a slide in the employment component from 56.7 to 55.3 points, and this could lower the expectations for Friday’s NFP. It is the lowest in more than a year.
The US dollar is falling.
Other components: new orders are down to 57.9 from 59.2, while prices paid rebound from 50.1 to 55.9 points.
The ISM Non-Manufacturing purchasing managers’ index was expected to slip down to 57.1 points in May from 57.8 in April. Any score above 50 represents growth.. The services sector is the largest in the US, and the indicator’s employment sub component is a critical hint for the Non-Farm Payrolls.
The dollar was down before the release, falling in a flash manner before only partially recovering.
Currencies (updating):
- EUR/USD traded higher despite Draghi not rocking the boat, at 1.1210. The pair now advances to 1.1235
- GBP/USD traded just above 1.53 despite a weak services PMI in the UK. GBP/USD is testing the highs at 1.5315.
- USD/JPY traded around 124.40.The pair is now down to 124.12.
- USD/CAD was around 1.2450. Trade balance was OK in Canada. Dollar/CAD is at 1.2435.
- AUD/USD was at 0.7785, enjoying the better than expected GDP report. The Aussie rises above 0.78.
- NZD/USD was recovering from the lows at 0.7150. The recovery continues to 0.7165.
Previous hints towards the NFP came out better than expected, but not all is perfect in the US economy this week:
- ADP NFP came out at 201K, as expected and a solid read. It strengthens the 200K expectations for the NFP.
- ISM Manufacturing PMI beat expectations, and so did its employment component.
Stay tuned for a preview on how to trade the NFP with EUR/USD.
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