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US Dollar Slips as December ISM Services Miss; Employment Index Up

US Dollar Slips as December ISM Services Miss; Employment Index Up

Christopher Vecchio, CFA, Senior Strategist

Talking Points:

- ISM Services remains below trailing 12-month average (54.7) at 53.0.

- Employment subindex rise suggests NFP growth to remain near +200K.

- US yields fall, weighing on US Dollar immediately after data.

The US economy continued to growth through December, but perhaps at a slightly slower pace, as the recent ISM surveys have showed. On Thursday, the ISM Manufacturing gauge eased to 57.0 from 57.3; today, the ISM Services gauge dropped to 53.0 from 53.9. It is worth pointing out that service jobs account for two-thirds of all employment in the United States, and therefore the jump in the ISM Services Employment subindex bodes well for the December NFP report, due on Friday.

With headline US economic data coming in just a touch softer than anticipated, US Treasury yields slipped, leading to a weaker US Dollar. The US Treasury 10-year note yield decreased from 2.975% ahead of the release to as low as 2.956%; the yield was well-off the daily high at 3.012%.

Here’s the data hurting the US Dollar:

- ISM Services (DEC): 53.0 versus 54.7 expected, from 53.9.

- ISM Employment (DEC): 55.8 from 52.5.

EURUSD 1-minute Chart: January 6, 2014 Intraday

US_Dollar_Slips_as_December_ISM_Services_Miss_Employment_Index_Up_body_x0000_i1027.png, US Dollar Slips as December ISM Services Miss; Employment Index Up

Charts Created using Marketscopeprepared by Christopher Vecchio

Following the data, the EURUSD jumped from $1.3612 to as high as 1.3634, a fresh daily high. The pair traded as low as 1.3618 after the release, but at the time of writing, had since rebounded back to 1.3628. Price action in other USD-based pairs was similar, with the USDJPY falling from ¥104.81 to as low as 104.61.

Read more: Euro Faces First Test of 2014 as Rates Fall Ahead of ECB

--- Written by Christopher Vecchio, Currency Analyst

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