The US dollar started the week with poor performance yet was able to bounce against most major currencies, though not all of them. Today’s data about the US services sector was positive for the most part, providing some support for the currency.
The report from Markit Economics showed that non-manufacturing Purchasing Managers’ Index rose from 57.1 to 59.2 last month. The data from the Institute for Supply Management was not as good, showing a small drop of the index. Nevertheless, the ISM PMI also demonstrated a healthy state of the services industries despite the slowing rate of growth.
The dollar bounced after the report while the currency was performing poorly before due to the lasting impact of weak non-farm payrolls. Comments from William Dudley, President of the New York Fed, added to the pressure on the currency as he said about timing for an interest rate lift-off:
The timing of normalization will be data dependent and remains uncertain because the future evolution of the economy cannot be fully anticipated.
On the other hand, Dudley mentioned the recent string of negative report, including the NFP, attributing them to temporary factors like harsh winter:
Overall, I view these downside surprises as reflecting temporary factors to a significant degree.
EUR/USD ticked down from 1.1003 to 1.0992 as of 16:44 GMT today. USD/JPY gained from 118.83 to 119.11. GBP/USD was up from 1.4916 to 1.4939 but retreated from the daily high of 1.4980.
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