ISM's US non-manufacturing business data fell, risking a Fed rate cut and raising doubts about Friday's Nonfarm Payroll release.

The US Dollar exchange rate has weakened against various major currencies over the past few sessions. The US Dollar Index (DXY) was around 104.26 when the news was written in the Asian session on Thursday (4/April). Positive developments in the US manufacturing business buoyed the greenback at the start of the week. Still, they were then disappointed by JOLTS data and the ISM non-manufacturing index.

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JOLTS Job Vacancies data was recorded at only 8.756 million in February 2024, whereas the consensus expected an increase to 8.766 million. January JOLTS data was also revised down significantly from 8.863 million to 8.748 million.

The ISM survey of US non-manufacturing business activity resulted in a drop in the score from 52.6 to 51.4 in March 2024, whereas the consensus expected a slight increase to 52.8. A breakdown of the data revealed a slowdown in the Prices and New Orders subindices, while the Employment subindex missed forecasts.

The United States also released some data that performed well, specifically the ADP Nonfarm Employment Change and Monthly Manufacturing Orders. However, the decline in the Prices subindex in the US Nonmanufacturing PMI had a broader impact.

"Although (US) employment is almost stable, the sharp decline in the prices component from its peak in January supports our belief that some weaker inflation numbers will emerge soon. This will be the point policymakers look for to initiate rate cuts this summer," said Kyle Chapman, Market Analyst at Ballinger Group.

The decline in the ISM data also fueled market doubts over Friday's Nonfarm Payroll data release. Some traders fear that the actual Payroll figure will be lower than the current consensus estimate of 205k. However, some experts argue that the correlation between ISM PMI and Nonfarm Payroll data has faded since the pandemic.

James Knightley, Chief International Economist at ING Bank, said, "With both the manufacturing and services ISM employment components being below 50 - indicating declining employment levels - this theoretically means weak payrolls data on Friday, but the report has its own underpinnings and doesn't correlate with anything at the moment."