USD is highly vulnerable to sub-consensus readings in the ISM Services Index – ING DollarIndex PMI UnitedStates Banks Fed
“Markets are clearly attaching more recessionary risks to the Dollar, but – we want to reiterate this point – it appears that thehas not provided any solid anchor to rate expectations so more subdued readings in key releases can definitely bring more downward pressure to the Dollar. On the contrary, above-consensus readings could prompt a rapid rebound in the very volatile Fed funds pricing and trigger a Dollar correction.
“Today, the ISM Services Index will be the big market mover, and the consensus is looking for a decline from 55.1 to 54.4. Back in December, a one-off drop below 50 sparked recessionary panic and crippled the Dollar. Now, the combination with yesterday’s decline in job openings could mean that even prints in the 52-53 area could have a similar effect. With that in mind, we think the balance of risks is skewed to the downside for the Dollar today.
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