US Dollar sees upbeat Services ISM report come a little too late

LONDON (March 5) The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against six major currencies, is unable to recover this Wednesday with again deepened out losses in already turbulent week for the DXY. The downward move comes as traders further unwind their overall Dollar exposure now that several analysts are calling the end of the United States (US) exceptionalism amid concerns that US President Donald Trump’s tariffs could damage economic growth. The move comes ahead of the European Central Bank (ECB) rate decision on Thursday and the US Nonfarm Payrolls report for February on Friday.

On the economic data front, the Institute for Supply Management (ISM) was a small positive point for markets. After the big miss in the ADP private payrolls number, the ISM Services report came in stronger on all fronts. Though, these positive numbers could create an issue again, with this time the Prices Paid component possibly feeding some inflation. 

Daily digest market movers: ISM outlier or too early?

• At 13:15 GMT, the usual appetizer ahead of the Nonfarm Payrolls came in with the ADP Employment Change number for February. The number came in at 77,000, far below the xpectations for 140,000 new employees in the private sector, below the 183,000 in January.
• At 14:45 GMT, S&P Global has released its final reading for the Purchasing Managers Index (PMI) on the Services sector. The number came in at 51, beating the expectations for a steady 49.7.
• At 15:00 GMT, the ISM released its PMI report on the Services sector for February:
  • Services PMI came in at 53.5, beating the 52.6 estimate and a touch stronger than the previous 52.8.
  • The Employment component, came in at 53.9, beating the 52.3 in January.
  • The New Orders component reached 52.5, an uptick from the 51.3 previously.
• At 18:00 GMT, Federal Reserve Bank of Richmond President Thomas Barkin delivers a speech titled "Inflation Then and Now" at the Fredericksburg Regional Alliance in Fredericksburg, United States.
• At 19:00 GMT, the Federal Reserve will release the Beige Book, which reports on the current US economic situation.
• Equities are surging after the upbeat ISM numbers, providing a sigh of relief. 
• The CME Fedwatch Tool projects a 21.0% chance that interest rates will remain at the current range of 4.25%-4.50% in June, with the rest showing a possible rate cut. 
• The US 10-year yield trades around 4.24%, off its near five-month low of 4.10% printed on Tuesday.

FXStreet