Talking Points:

-ISM Non-Manf. Composite (JAN) at 54.0 vs. 53.7 est. and 53.0 prior

-USD/JPY spike is weak

-Breakdown shows better employment, production components

The ISM Non-Manufacturing Composite print for January showed a slight uptick as the print came in at 54.0, beating estimates of 53.7 and the December figure of 53.0. The Non-Manf. breakdown indicated that we saw better components for prices, employment, inventories and production. Notably, the only component to decline MoM was in fact export orders- a possible indication of mounting pressure in global trade as the Baltic Dry Index presses lows not seen since last summer.

USDJPY_US_Equities_Unable_to_Hold_ISM_Gains_body_Picture_3.png, USD/JPY, US Equities Unable to Hold ISM Gains

USD/JPY February 5, 2014 (5-Minute Chart)

USDJPY_US_Equities_Unable_to_Hold_ISM_Gains_body_Picture_2.png, USD/JPY, US Equities Unable to Hold ISM Gains

Source: FXCM Marketscope

The better than expected ISM figure helped lift the greenback, US Treasury yields and equities, but the move has proved short lived thus far. Momentum in USD/JPY price action has been slowing over the past half hour and- as has been the case over the past two weeks- Yen weakness continues to be short lived. Yields on the 10yr continue to remain higher after approaching the 200d moving average yesterday. In the New York session thus far we have seen yields spike from a low of 2.60% to a high of 2.66%. The next major event risk (aside from developments in the U.S. equity market) will be the BoE and ECB tomorrow.

USDJPY_US_Equities_Unable_to_Hold_ISM_Gains_body_Picture_1.png, USD/JPY, US Equities Unable to Hold ISM Gains

Gregory Marks, DailyFX Research Team

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