Dollar Awaits NFP, Euro Slides Post Services PMI

Dollar Awaits NFP, Euro Slides Post Services PMI

By: Simon Furman | Where To Trade | On:3-10-2014 06:55
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Key Highlights

  • Euro zone services PMI came in at 52.4, down from the previous reading of 52.8.
  • German services PMI exceeds the expectation and climbed from 55.4 to 55.7.
  • Italian and French services PMI also registered decline and registered readings below 49.0.
  • UK services PMI failed to impress the British pound buyers, as it fell from 60.5 to 58.7 in September 2014.
  • US dollar is in waiting mode ahead of the all-important NFP release, which might ignite a lot of moves in the US dollar.

UK Services PMI

There was no relief for the British pound buyers, as it continued to decline against the US dollar and the Euro. One of the main reasons for the decline is the recent economic data and the market sentiment. The market sentiment is playing a major role in the weakness, which has increased the pressure on the GBPUSD pair.

Today during the London session, the UK services Purchasing Managers' Index (PMI) was released by the Chartered Institute of Purchasing & Supply and the Markit Economics. The market was expecting it to decline from 60.5 to 59.1. However, the outcome was even worse, as the UK services PMI fell to 58.7. This was less than expected, but not at all on the negative side. The report also mentioned that the growth in the UK’s private service sector was sustained during September 2014. This was mainly due to rise in the new business volumes. However, the market failed to digest the fact that this was the lowest reading in the last three months.

UK Services PMI

UK Services PMI

There was an important point mentioned in the report, which cannot be ignored. The report highlighted that “forecasts for activity remained in positive territory over the month, with around half of the survey panel predicting growth from present levels over the next year”. The GBPUSD pair was still not impressed, and was seen trading lower. It broke an important support area of 1.6080 and looks set for a move towards the 1.6020 area.

Euro zone and German Services PMI

There were a couple of releases in the Euro zone as well during the Asian session, including the Euro zone services PMI, German services PMI, Italian services PMI and Spanish services PMI. The outcome was mostly negative, as except the German services PMI rest all registered a decline. The Italian and French PMI were the most disappointing ones, as they both fell below the 49.00 mark and registered contraction one more time.

The EURUSD pair traded lower, and broke an important bullish trend line on the hourly chart. The market sentiment looks in the favor of the US dollar, and eyes the US NFP and unemployment data for further action. The market is expecting a gain of 215K jobs this time, and if the outcome stays in line with the expectation, then we might see some more dollar buying during the New York session. The 1.2550 level remains a major support for the Euro in the near term.

Simon Furman

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