US Dollar Pares Earlier Losses As March ISM Non-Manufacturing Decelerates

By Tzu-Wen Chen,

THETAKEAWAY: [U.S. non-manufacturing activity grew in March,but decelerated more than expected] > [Business activitydecelerates; Employment growth accelerates] > [USDCADstrengthens ]

U.S. economic activity in the non-manufacturing sector grew in March for the 27th straight month. However, the pace of economic activity decelerated more than expected, with a report released by the Institute for Supply Management (ISM) showing that its non-manufacturing index fell to 56.0 percent in March from the 57.3 percent registered in February. The consensus forecast according to 69 economists polled in a Bloomberg News survey had projected a reading of 56.8.

The Business Activity index, which is considered the most significant sub-index, fell to 58.9 percent, 3.7 percentage points lower than the 62.6 percent reported in February. Similarly, the New Orders Index declined to 58.8 percent from 61.2, while the Prices Index fell 4.5 percentage points to 63.9 percent, indicating prices increased at a slower rate in March. On the other hand, the Employment index rose by 1 percentage point to 56.7 percent, signaling continued growth in employment at a slightly fast rate.

Overall, respondents remained optimistic about business conditions and indicated that increasing consumer and business sentiment has been reflected in increased discretionary spending. However, businesses highlighted continued concern regarding cost pressures and fuel price uncertainty.

USD CAD 1-minute Chart: April 04 ,2012

Chart createdusing Strategy Trader – Prepared byTzu-Wen Chen

Following the data release, the greenback strengthened against its major currency counterparts. As seen on the 1-minute USDCAD chart above, the US dollar pared losses seen in earlier trade, climbing by 15 pips from pre-data release levels to trade at around $0.9963 against the loonie at the time of this report.

--- Written by Tzu-Wen Chen DailyFX Research
DailyFX is the forex news and research arm of FXCM, Inc (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

Original Article: http://www.dailyfx.com/forex/market_alert/2012/04/04/US_Dollar_Pares_Earlier_Losses_As_March_ISM_Non-Manufacturing_Decelerates.html

DailyFX is the forex news and research arm of FXCM (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

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