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The ISM Non-Manufacturing PMI for November 2013 disappointed with a drop to 53.9 points. It carried expectations of scoring 55.4 points, the same figure as in October. The services sector is by far the largest in the US, making this release very important. The employment component dropped to 52.5 points, and this serves as a warning sign for Friday’s Non-Farm Payrolls. US new home sales for September and October were expected to stand at around 430K each. The figure for September came out weak at 354K and for October we have a small upside surprise at 444K.  

The dollar was stronger towards the publication: EUR/USD traded at around 1.3540, GBP/USD at 1.6360 and USD/JPY just under 102.50. The dollar is now retreating a bit with EUR/USD rising above 1.3550 and GBP/USD at 1.6370.

Despite the drop in the headline and in the employment component, the report shows that new orders remain at high levels: 56.4 points. Also new export orders look good, with a rise to 58 points.

All in all, the data is OK, but not good enough, and doesn’t match the strength of the previous releases.

Earlier, the ADP NFP report showed a big gain of 215K in the private sector, significantly above expectations. The good news joined better than expected ISM Manufacturing PMI on Monday. The data points to a good Non-Farm Payrolls report on Friday, and implies QE tapering in December: the “Dectaper”.

The Markit services PMI score for November is higher: 55.9 points, but the employment component is similar: 52.4 points. Markit’s survey is relatively new and doesn’t carry a lot of weight in the US.

More:  the real reason behind a potential Dectaper