Early Nonfarm Payrolls Help Dollar Despite Bad Data

EUR/USD fell sharply today paring the weekly gain as the employment statistics in U.S. was released. Not only employment figures disappointed market participants, but also ISM services index declined faster than expected in June. But for some strange reason that supported the U.S. dollar and it showed the fastest daily gain since April 24. EUR/USD declined from 1.5890 to 1.5695.

Nonfarm payrolls lost 62k in June, that loss followed the same decline in May (revised up from 49k loss) and was worse than 60k of the forecast. Unemployment rate remained at 5.5%, while it was expected to fall to 5.4%.

ISM services index lost 3.5% in June and is now at 48.2%. It was expected to go down to 51.0% only. The current decline in this index followed decline in May, which indicates a real stagnation in the non-manufacturing sector.

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Dollar Tries to Keep Yesterday Gains

Dollar is still trying to hold its yesterday gains against euro, as it can benefit from the fundamental indicators released today in U.S. EUR/USD rose only from 1.5433 to 1.5449 today after losing more than 100 pips yesterday.

Productivity in the nonfarm business sector grew at 2.6% annually and seasonally adjusted rate in the first quarter of 2008 — slightly better than the preliminary estimate (2.5%).

ISM services (non-manufacturing) index for month of May was released today showing a decrease from 52.0 to 51.7, while a forecast value for this index was 51.0.

Crude oil inventories were down 4.8 million barrels last week and are now in the lower half of the
average range for this time of year.

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