US Dollar Pares Earlier Losses As March ISM Non-Manufacturing Decelerates
THE TAKEAWAY: [U.S. non-manufacturing activity grew in March, but decelerated more than expected] > [Business activity decelerates; Employment growth accelerates] > [USDCAD strengthens]
U.S. economic activity in the non-manufacturing sector grew in March for the 27th straight month. However, the pace of economic activity decelerated more than expected, with a report released by the Institute for Supply Management (ISM) showing that its non-manufacturing index fell to 56.0 percent in March from the 57.3 percent registered in February. The consensus forecast according to 69 economists polled in a Bloomberg News survey had projected a reading of 56.8.
The Business Activity index, which is considered the most significant sub-index, fell to 58.9 percent, 3.7 percentage points lower than the 62.6 percent reported in February. Similarly, the New Orders Index declined to 58.8 percent from 61.2, while the Prices Index fell 4.5 percentage points to 63.9 percent, indicating prices increased at a slower rate in March. On the other hand, the Employment index rose by 1 percentage point to 56.7 percent, signaling continued growth in employment at a slightly fast rate.
Overall, respondents remained optimistic about business conditions and indicated that increasing consumer and business sentiment has been reflected in increased discretionary spending. However, businesses highlighted continued concern regarding cost pressures and fuel price uncertainty.
Chart created using Strategy Trader – Prepared by Tzu-Wen Chen
Following the data release, the greenback strengthened against its major currency counterparts. As seen on the 1-minute USDCAD chart above, the US dollar pared losses seen in earlier trade, climbing by 15 pips from pre-data release levels to trade at around $0.9963 against the loonie at the time of this report.
--- Written by Tzu-Wen Chen DailyFX Research
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