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FOREX-Dollar slides vs yen, euro on soft U.S. services data
January 6, 2014 / 9:32 PM / 4 years ago

FOREX-Dollar slides vs yen, euro on soft U.S. services data

* U.S. services sector growth slowed in December
    * Euro helped by data ahead of ECB meeting
    * Yen firms as stock markets fall
    * Market focus on U.S. Fed minutes, monthly non-farm
payrolls data

    By Curtis Skinner
    NEW YORK, Jan 6 (Reuters) - The dollar fell from one-month
highs against the euro and slid to two-week lows against the yen
in light trading on Monday as weaker-than-expected data on the
U.S. services sector reflected slowing growth at the end of last
    The greenback's losses accelerated after separate readings
showed U.S. services sector growth slowed in December, pointing
to an economy that continues to expand, but at a modest pace.
    "The dollar's quick dash out of the gates this year
encountered a few speed bumps on cooler U.S. services growth
last month and caution ahead of risk events this week involving
the Federal Reserve and the government's monthly jobs report,"
said Joe Manimbo, senior market analyst, at Western Union
Business Solutions in Washington.
    Data showed that the pace of growth slowed for a second
straight month in December, with business activity expanding at
a lower rate and new orders contracting, according to the
Institute for Supply Management. 
    Separately, financial data firm Markit said its services
sector Purchasing Managers Index dipped to 55.7 from 55.9 last
    The reports affirmed expectations that the U.S. central bank
will pare its monthly bond purchases at a gradual pace this
    New orders for U.S. factory goods, however, rebounded in
November, adding to signs of strong economic momentum in late
    Trading was light at the start of this week as the Fed's
December meeting minutes, due on Wednesday, could hint at the
timing and pace of any further reductions in stimulus and set
the pace for trading in the early part of the year.
    Friday will bring the U.S. non-farm payrolls report for
December, which could shed light on whether domestic job growth
is strong enough for the Fed to continue tapering its asset
    The dollar index, which tracks the greenback against
a basket of six major currencies, last traded down 0.2 percent
at 80.668 after hitting 80.910 earlier in the global session -
its highest since Dec. 4.
    The euro benefited from positive euro zone data that
suggested the European Central Bank will not loosen policy
further anytime soon.
    The euro recovered from a one-month low to trade 0.33
percent higher at $1.3630, finding support as euro zone
sentiment hit its highest in nearly three years. 
    The euro was down 0.3 percent at 142.02 yen.
    The euro zone Composite Purchasing Managers Index, which
gauges how thousands of manufacturing and services companies
fare every month, rose to 52.1 in December, in line with
forecasts, with readings above 50 indicating growth.
    The upbeat euro zone data came ahead of the European Central
Bank's first policy meeting of 2014 on Thursday. While another
rate cut after November's surprise move is seen as unlikely, the
bank has the ability to issue further cheap loans to banks.
    "The big question is whether the recovery in the euro zone
is real or sustainable. This indicates at least it isn't
faltering," said Marshall Gittler, head of global FX strategy at
IronFX Global in Limassol, Cyprus. "There's no need (for them)
to come out with a sudden move."
    The yen, meanwhile, pulled away from recent five-year lows
versus the dollar and the euro as a fall in global stocks
prompted traders to buy the safe-haven Japanese currency.
    Asian shares led global stocks lower after
growth in China's services sector slowed sharply last month.
    The Nikkei and the yen - the weakest major currency
of 2013 - tend to move in opposite directions.
    "Are we seeing market positioning adjustments or are we
seeing a technical reversal?" said Marc Chandler, chief global
currency strategist at Brown Brothers Harriman & Co. "I think
this is largely market positioning and adjusting of positions.
There's no fundamental catalyst for this."
    The dollar was last down 0.5 percent to 104.26 yen,
according to Reuters data. That was the largest daily percentage
drop since October.

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