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US Services PMI Marginally Higher

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US Services PMI Marginally Higher

Markit Economics have followed up on Monday’s publication of the US Manufacturing Purchasing Managers Index (PMI) with today’s Services PMI figure. The March reading of this number is 55.5 slightly higher than last months 53.3 and also beat consensus estimates for 54.2.

As a reflection of the mature and stable nature of the US economy the PMI data, whether manufacturing or services, tends to be resilient and seldom falls below the key 50 level which marks the difference between expansion and contraction of this key indicator.

The figure, although only marginally higher than anticipated, is still a healthy one considering that Q1 growth in the US has been restrained somewhat by the harsher than usual winter. Dollar traders realize this and are not overly punishing the currency on the back of poor data readings.

The Dollar did however sell off slightly earlier today following the publication of the Durable Goods Orders figures. Despite the fact that the headline number considerably beat expectations the markets attention quickly turned to the ex-Transport component of this data which showed a minor contraction, this is most likely due to large aircraft orders announced by Boeing skewing the figures.

EUR/USD has been particularly subdued over the past week since it failed in its bid to break through the mid 1.39s resistance and push on to challenge the key 1.40 level. In all probability this failed attempt to move higher is not being caused by a fight back from the US Dollar, more likely it is a market response to the ECB’s newly announced concern over a rising Euro.

Cable is also off after recently failing to make new medium term highs. Unlike EURUSD however this currency pair is clearly comfortable in a well defined upward channel, currently GBPUSD is supported at the bottom of this channel which is six figures wide. This would imply that should the channel hold we can expect Cable to challenge 1.70 in the coming weeks.

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