The ISM purchasing managers’ index for the services sector scored 56.1 points in December. A figure of 54.2 points was expected after last month’s 54.7 points. It’s important to note that the employment component is also very strong: 56.3 points. Could the fresh NFP number be revised higher next month?
EUR/USD traded just under 1.3050 and USD/JPY stood on around 87.80 before the release. The dollar is marginally stronger initially: EUR/USD is sliding and USD/JPY is ticking higher.
The new orders component of the report also advanced, from 58.1 to 59.3, indicating strong future growth. This is clearly a positive report.
Factory orders remained flat, weaker than a rise of 0.4% that was expected. This is a figure for November, and the data could have been distorted by the Sandy super storm.
Earlier, the all-important Non-Farm Payrolls came out within expectations: a gain of 155K jobs and an unemployment rate of 7.8%. The release of the report triggered covering of USD longs. EUR/USD rose and USD/JPY plunged.
When the ISM Non-Manufacturing PMI is released before the NFP, it serves as a good hint, with the employment component being of high importance.
Further reading: FOMC Minutes Could Change Market Behavior to the Old Normal
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