A slight disappointment, but not totally unexpected: the US services sector is slowing down with 56.9 points in September. While it falls short of expectations, there are some positives here: the employment component is up from 56 to 58.3 points.Â
The US dollar is looking for a direction in the immediate aftermath.
Had the report been released before the NFP, perhaps we would have seen a stronger reaction. Why? The excellent employment component would have raised expectations and in turn, these would have hit the wall.
The new orders component provides the biggest shortcoming, with a big fall from the super strong 63.4 points to 56.7. Business activity is at 60.2, also lower.
- EUR/USD is a bit higher at 1.1220, still far from breaking the wedge. The pair made a second, failed attempt to move higher.
- AUD/USD stands out by extending its falls, currently 0.7060, after failing to settle above 0.71.
The Labor Market Conditions Index dropped to 0 after 2,1Â points last time. This is a separate report.
The ISM Non-Manufacturing Purchasing Managers’ Index was expected to show a drop to 57.5 points in September after 59 in August, still reflecting strong growth.
Towards the publication, the dollar was slightly stronger
This indicator, which provides a forward looking snapshot of America’s largest sector, usually serves as a hint towards the Non-Farm Payrolls. This time, the publication comes after Friday’s Nightmare NFP. Nevertheless, it provides a look at the state of the economy.
Earlier, similar PMIs from Europe, the UK and China all pointed to slowing economic activity. Markit’s US services PMI was revised to the downside: 55.1 points in September.
In our latest podcast we discuss the Nightmare NFP, Judge Japan and Natural Gas:
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