Search ForexCrunch

Forward-looking indices of the US economy point to a bad direction: also the all-important services  indicator plunged by over 4 points to 51.4 points, well below expectations and the lowest in over 6 years: the worst since January 2010. This is usually a guide to the NFP, and in this case, it seems even worse than the actual report showed. The employment component falls to 50.7, barely in growth territory. New orders are down to 51.4.  

The USD is falling across the board. There is just no silver lining.

A separate report showed the  IBD/TIPP Economic Optimism falling to 46.7 points, also worse than expected.

Currency reaction weak services sector report

  • EUR/USD wakes up and challenges 1.12.
  • GBP/USD tops 1.34
  • USD/JPY slips under 103.
  • USD/CAD drops  1.2860, with the loonie resisting lower oil prices.
  • AUD/USD is at resistance at 0.7660.
  • NZD/USD is going for a new 14 month high at 0.7380.

Here is how it looks on the EUR/USD chart:

EURUSD ISM Non Manufacturing PMI September 6 2016

A rate hike was off the cards already with the NFP and well beforehand, just because of the upcoming elections. Here is a video explanation:

The US ISM Non-Manufacturing purchasing managers’ index was expected to slip from 55.5 to 55 points for August. This critical services sector gauge usually serves as a hint for the jobs report. In this case, the NFP is already out and it has come under expectations. The parallel release for the manufacturing sector also badly disappointed with a drop to contraction zone.

The US dollar was slightly on the back foot ahead of the publication as Americans return from their Labor Day holidays. EUR/USD traded around 1.1160, GBP/USD at 1.3350 and USD/JPY at 103.30.

More: