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U.S. Dollar Unable to Gain Ground Despite Strong ISM-Services Data

U.S. Dollar Unable to Gain Ground Despite Strong ISM-Services Data

Diego Colman, Strategist

Talking Points:

- US Dec ADP at 153k below expectations of 175k, Initial Jobless Claims through Dec 31 below consensus at 235k

- U.S. Dec ISM Services/ Non-manufacturing beat market forecasts at 57.2

- Check out the DailyFX economic data calendar for market moving releases in the upcoming days.

Earlier today the ADP National Employment Report showed that the US Economy added 153,000 jobs in December while the November’s figure was revised lower to 215,000 from 216,000. Market analysts polled by Bloomberg had expected to see an increase in 175,000 positions. Although private hiring slowed last month, the job market remained solid, an indication that the US economy may be approaching full-employment.

A separate weekly report by the U.S. Department of Labor showed that the number of Americans filing for unemployment benefits declined to a 43-year low for the week ending December 31 falling 28,000 to 235,000; providing further evidence that the labor market continues to tighten. Meanwhile, claims for the prior week were revised lower to 263k from 265k. Needless to say, a healthy labor market supports the case for additional interest rate increases in the upcoming year so long as inflation trends higher towards the Fed’s 2.0% goal.

The Institute of Supply Management also released its monthly Services/Non-Manufacturing Survey. The report revealed the ISM Non-Manufacturing Index remained steady at 57.2 in December growing for the 83rd consecutive month and beating consensus for print of 56.8. As a reminder, a print above 50 in the ISM Index signals expansion whereas a reading below 50 indicates contraction. Results for the survey points to rising optimism among businesses which is a vote of confidence in the economic outlook.

Here’s a summary of the US data:

- USD DEC ADP Employment Change (DEC): +153k versus +175k expected from +215k in November.

- USD Initial Jobless Claims (DEC 31): +235k vs +260k expected from +263k

- USD ISM Services/Non-Manufacturing: +57.2 versus +56.8 expected from +57.2

Chart 1: US Dollar Currency Index 5-minute Chart Intraday (January 5, 2017)

Despite some the better-than-expected ISM Non-Manufacturing and jobless claims the greenback was unable to reverse earlier losses and gain ground against G-10 peers with the DXY Index falling approximately 1.23% to 101.47 in intraday trading at the time this report was written.

Read more: FOMC Minutes Dent Dollar; DXY Still in Range

--- Written by Diego Colman, DailyFX Research

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.