U.S. data have been disappointing. The weekly initial jobless claim increase has been followed by a weaker than expected ISM manufacturing report. The ISM fell to 56.2 from 59.7. The consensus had anticipated a smaller decline to 59. Weakness was especially pronounced in new orders, which fell to 58.5 from 65.7 Employment eased to 57.8 from 59.8. Prices paid fell dramatically to 57.0 from 77.5.On the other hand, construction spending was not as soft as expected. The 0.2% decline contrasts with expectations for a 0.8% fall after the 2.3% jump in April, the biggest increase since 2000. Residential outlays fell 0.4%, and non-residential construction slipped 0.1%. Public works rose 0.4% after 1.6% gain in April. Pending home sales rounds out the releases. They fell 30% in May, nearly twice as large of a decline as the consensus expected. The generally disappointing data has encouraged additional dollar selling in an already offered market. The data plays not only on the economic slowdown story but also the deflationary/disflationary story. Equities have extended their earlier losses and the bond market finds support. There is talk of barriers struck near JPY87. The euro tested the $1.2450 level ahead of the high from a couple weeks ago just below $1.25. Sterling has extended its gains and is closing in on the week's high near $1.5129, which is also a multiweek high.