The focus of yesterday morning was seeing if the current data from the UK would continue to disappoint with the most important monthly PMI release in Services. A continued lag of economic activity seen at the start of this year was again evident as the service sector for February fell to its lowest growth for almost three years. As the service PMI makes up around 80% of the overall GDP for the UK, this drop to 52.7 for this gauge is down to a slowdown of new business volume which has shown in the weaker construction and manufacturing PMI’s earlier this week. However, Sterling did not move much as a result of this as the heavy sell off seen last week from the Brexit concerns has simmered, but this is still a major focus.
The US ISM non-manufacturing PMI came out at a disappointing 53.4 for February. The decline from 53.5 in January is the fourth straight drop for this sector and is now at a fresh 23 month low. Although still in expansion territory, the Dollar lost ground against the Euro and more so against the Pound. This could signal that the Greenback has been over bought and now with the all-important employment data set for release later today, the Dollar could be in for a bumpy ride.
As the end of March’s first week comes to a close, we are treated with the biggest data releases from the US, Non-farm Employment figure and Unemployment rate. Good figures seen in these gauges today would have the markets looking to the Fed to possibly talk about raising rates sooner than they are penciling in. Indeed the data is going to be scrutinized on its release and volatility will be seen for the Dollar.