US Dollar Remains Strong Despite Arpil ISM Non-Manufacturing Decelerates

By Trang Nguyen,

THETAKEAWAY: U.S.non-manufacturing activity grew less thanexpected in April but > Businessactivity , new orders, employmentgrowth and prices alldecelerated > USD remainsstrong versus major peers

U.S. economic activity in the non-manufacturing sector continued to expand at a slower pace in April as sale has slightly improved, business conditions has leveled off, and fuel and food continued to be a challenge.

The report released by Non-manufacturing Institute of SupplyManagement (ISM) report showed that its April non-manufacturing indexdisappointingly declined to 53.5 percent from 56.0 percentregistered in March. The print is well below consensus forecast of55.3 percent, according to seventy-four economists polled byBloomberg News survey.

The Business A ctivity index, which is considered the mostimportant in 10 sub- indexes reported , slipped to 54.6 percent, 4.3 percentagepoints lower than the 58.9 percent reported in March. Thiscorresponds with survey responses that “business is slowingand projections for the rest of the year are being lowered”.Similarly, the New Orders index fell 5.3 percent to 53.5 percent asa result of contraction in four industries including mining,utilities, health care and public administration.

Employment index, which rose 1 percent to 56.7 percent in March, unexpectedly decreased by 2.5 percent to 54.2 percent, pointing to slower pace of job creation. Additionally, the Prices index tumbled 10.3 percent to 53.6 percent, suggesting price increase at a significantly slower rate in April compared to March. Nonetheless, respondents remain concerned about rising fuel costs and the impact on shipping, transportation and petroleum-based product costs.

EURUSD 1-minute Chart: May3 ,2012

Chart createdusing Strategy Trader – Prepared byTzu-Wen Chen

The greenback remained strong versus most of its major currency counterparts after the lower-than-expected ISM non-manufacturing report. As seen on the 1-minute EURUSD chart above, the currency pair dropped approximately 30 pips from 1.3180 to 1.3150. At the time this report was written, the euro saw some correction, trades at $1.3160.

--- Written by Trang Nguyen, DailyFX Research Team for DailyFX.com

To contact Trang, email tnguyen@dailyfx.com
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/2012/05/03/050312_U.S._April_ISM_Non-Manufacturing_Composite.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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