Weaker than expected US services sector data worried investors yesterday afternoon and concerns over jobs data were raised. Doubts that the Federal Reserve (Fed) will raise interest rates in 2017 have increased which sent the dollar tumbling after what was a relatively strong start to the day.
A report indicated that the non-manufacturing index fell to 53.9 last month from 57.4 in June. While a reading above 50 in the index indicates expansion in the sector, the figure came in below expectations of 57.0. The non-manufacturing employment index fell to 53.6, below economists’ expectations for a rise to 56.5.
The euro rose modestly against the dollar and hit US$1.1892, just below Wednesday’s high of $1.1909. The market saw this as a precursor for a disappointing non-farms employment figure later today, which is closely watched by economists for signs of support for interest rate hikes in the US. While yesterday’s data dampened expectations for a strong payrolls figure and a Fed rate increase, one analyst said a potential jump in the job figure could prove instrumental to the US dollar. We will find out later today.
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