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The rebound in the \u201crisk-on\u201d trade ended yesterday with a resumption of the European debt crisis. Moody\u2019s was the spoiler in both the morning hours<\/a> and the North American session after it downgraded Portugal\u2019s government bond rating to junk, snapping a 5-day wins streak for US equities and sending the euro lower. Today\u2019s US services PMI is the headline event and a disappointing number may help to shift market sentiment in favor of the USD.<\/p>\n <\/span>Today\u2019s Economic Data Events:<\/p>\n GBP \u2013 Halifax HPI m\/m \u2013 07:00 GMT EUR \u2013 German Factory Orders \u2013 10:00 GMT USD \u2013 ISM Services PMI \u2013 14:00 GMT JPY \u2013 Core Machinery Orders m\/m \u2013 23:50 GMT
\nActual: 1.2%. Expectations: 0.1%. Previous: 0.1%.
\nYesterday\u2019s UK services PMI data provided some short term relief for cable but the warm fuzzy feeling did not last long. This morning\u2019s surprise jump in UK housing prices was largely ignored by market participants with USD strength the winner in early European trading as the GBP\/USD is testing yesterday\u2019s low at 1.5990. A break here will target the March low at 1.5930.<\/p>\n
\nExpectations: 0.7%. Previous: -0.6%.
\nThe euro has been pressured after Moody\u2019s warned of impairment charges for banks rolling over Greek debt and the selling of the euro intensified following the downgrade of Portugal\u2019s bond rating to junk status. Weak euro zone growth is anticipated in the near-term and is expected to slow after additional interest rate increases by the ECB which will likely come tomorrow. EUR\/USD support is 1.4340 followed by the rising support line from the May 23rd low which comes in today at 1.4140. Resistance is this week\u2019s high at 1.4580.<\/p>\n
\nExpectations: 53.9. Previous: 54.6.
\nA disappointing PMI <\/a>will likely support USD buying and threaten last week\u2019s rally in US equity markets that is already beginning to show signs of weakness. Yesterday the S&P 500 snapped a 5-session win streak with a -0.13% decline. <\/p>\n
\nExpectations: 3.1%. Previous: -3.3%.
\nThe dollar has been firming versus the yen but the pair maintains its current range. This is despite improving Japanese data releases that show the economy may be rebounding from the earthquake and tsunami faster than previously expected. The 81.25 level looks to cap any USD\/JPY appreciation while the rising support line off of the June low will likely contain any declines at 80.40.<\/p>\n