Dollar Nosedived As Services PMI Missed Forecast

Dollar Nosedived As Services PMI Missed Forecast

By: Darryl Frankfort | Where To Trade | On:27-04-2015 12:03
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Key Highlights

  • US Dollar fell sharply during the start of the NY session, as the Services PMI missed the forecast of a rise to 59.5.

  • US Services Purchasing Managers Index (PMI) representing business conditions in the services sector released by Markit Economics came in at 57.8 in April 2015, declining from the last reading of 59.2.

  • US PMI monthly composite reports on Manufacturing and Services also declined in April and came in at 57.4, down from the last reading of 59.2.

  • USDCAD traded sharply lower and tested an important support area at 1.2100.

Key Releases:

US Services PMI (US Dollar)

US PMI Composite (US Dollar)

US Services PMI

Earlier during the NY session, the Services Purchasing Managers Index (PMI) suggesting business conditions in the services sector was released by Markit Economics. The market was expecting a minor rise in April from 59.2 to 59.5. However, the outcome missed the mark and registered a decline. The US Services Purchasing Managers Index came in at 57.8, which was not only below the expectation, but was lower compared to the last reading of 59.2. This caused a downside reaction in the US dollar, as it traded lower against almost all major currencies. However, the US Services PMI is still in the positive territory and points that the US recovery is well on the track.

The report mentioned that there was growth noted in the business activity, new work and employment levels. However, the rate of growth eased from the seven-month high, which was the only negative point to note. One important point to mention here is that the index is still above the average seen since the survey began in late-2009 i.e. 55.9.

Commenting on the recent release, the Chief Economist at Markit Chris Williamson, mentioned that the “service sector enjoyed strong growth at the start of the second quarter, adding to evidence that the economy remains in good health. Although the pace of expansion slowed compared to March, April saw the second-largest rise in business activity for seven months”.

US PMI Composite

There was one more release lined up as the US PMI monthly composite reports on Manufacturing and Services was published. The outcome was again on the lower side with a decline from 59.2 to 57.4.

Market Reaction

Futures for the Dow Jones Industrial Average moved lower towards 18,055 and the S&P 500 index was down by 5 points to 2,112.

 

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