The dollar weakened further against its peers today following the release of US service sector data revealing declines in January which triggered fear that deficiencies in manufacturing could be spilling over into other sectors.  The dollar had been pressured to the downside once the Institute for Supply Management reported that its non-manufacturing index dropped from 55.3 in December to 53.5 in January, marking a 1 year low compounding forecasts of 55.1.  Markit released data which revealed that US service sector data increased at a slower rate in January highlighting that economic growth could be losing traction.  US private sector gained 205,000 jobs in January while experts forecast a rise of 195,000.  Analysts predict Friday’s employment report will reveal an increase of 190,000 jobs in January.  The US dollar index fell 1.29% trading at 97.59.

The euro strengthened against the dollar with the pair rallying over 1% trading at 1.1106 off its session high of 1.1145 after having come off its session low of 1.0903 reached earlier in the day.  Data released out of the euro zone revealed that business activity wound down to its lowest level in 4 months in January, pressuring the European Central Bank to ramp up stimulus measures to jump start growth.  Euro zone composite PMI factoring both service sector activity and manufacturing activity dropped from 54.3 in December to 53.6 in January.    

The pound strengthened against the dollar with the pair surging over 1% trading at 1.4617 off its session high of 1.4648 after having come off its session low of 1.4383 reached earlier in the day.  The pound climbed to 3 week highs following the release of UK service sector data posting strong gains.  Markit’s UK services purchasing managers’ index rose from a reading of 55.5 in December to 55.6 in January, its highest level in 5 months while experts forecast a slight drop down to 55.3.      

The yen strengthened against the dollar with the pair plummeting 1.8% trading at 117.61 off its session low of 117.05 after having come off its session high of 120.04 reached earlier in the day.  The traditional safe haven yen remained stronger against the dollar even though oil prices were on the rebound today as the market stayed watchful in light of recent drops in oil and following sharp declines on Wall Street.    

The Australian, New Zealand and Canadian dollars strengthened against the greenback as commodity associated currencies were boosted after a rebound in oil prices.  The Aussie was up over 1% against the dollar with the pair trading at 0.7178 off its session high of 0.7189 after having come off its session low of 0.7002 reached earlier in the day.  The kiwi dollar surged over 2% against the greenback with the pair trading at 0.6675 off its session high of 0.6697 after having come off its session low of 0.6506 reached earlier in the day.  The kiwi dollar was supported following the release of New Zealand jobs figures which were better than expected.  Market sentiment was that the data will reduce the possibility of the Reserve Bank of New Zealand lowering interest rates.  The loonie advanced over 1.5% to 1 month highs against the broadly weaker greenback with the pair trading at 1.3791 off its session low of 1.3783 after having come off its session high of 1.4102 reached earlier in the day.  The loonie was underpinned as US crude futures surged over 8% reaching highs of $32.34 a barrel.    

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