USD flows: USD dips further on weak ISM services

Following on from the weaker ADP numbers, the ISM services survey has also come in much weaker than expected, putting further downward pressure on the USD, with the JPY the main beneficiary as US yields drop sharply. Whether the data rally increases the chances of Fed easing is more debatable, as the prices paid index hit 68.7, the highest since November 2022, from 65.1 in April, give a more serious inflationary warning. The more risk negative tone is likely to keep the JPY strong into the US employment data on Friday. The USD is also likely to see general weakness, but the EUR may be held back by the approach of tomorrow’s ECB meeting.