A big disappointment from the biggest sector: only 51.6 points for the ISM Non-Manufacturing PMI, worse than expected. The ISM Non-Manufacturing PMI (services sector) was expected to tick down from 54 to 53.8 points for February. The services sector is by far the largest in the US. The employment component provides an even bigger disappointment: only 47.5 points, reflecting contraction in hiring. This is certainly worrying even though the weather is blamed for the miss.
The dollar was stronger towards the release, with EUR/USD getting closer to 1.37, GBP/USD holding on to 1.67 and USD/JPY climbing above 102.50. The greenback now retreats, with EUR/USD climbing to 1.3736. USD/JPY is down under 102.40 and GBP/USD jumps to 1.6725.
Also USD/CAD is falling, despite a relatively dovish BOC rate statement, that came at the exact same time.
The rise of the dollar comes despite a disappointing release from ADP, that showed a gain of only 139K private sector jobs in February, in addition to a downwards revision for January. The second disappointing figure already weighs on the US dollar.
The employment component fell no less than 8.9 points, from a strong 56.4 points to 47.5 points. New orders actually rose from 50.9 to 51.3 points and prices fell from 57.1 to 53.7 points.
Here is a quote from the report related to the weather:
The majority of respondents’ comments indicate a slowing in the rate of growth month over month of business activity. Some of the respondents attribute this to weather conditions. Overall respondents’ comments reflect cautiousness regarding business conditions and the economy
The final read from Markit’s services sector PMI came out at 53.3 points, better than 52.7 points initially reported. The ISM figure carries more weight in the US.
For EUR/USD, the big event is now the ECB rate decision. Here is the ECB Preview: Mini QE and no negative rates? 4 scenarios
