US dollar falls around 50 pips across the board
EUR/USD jumped to 1.1174 from 1.1130 in the aftermath of the weak ISM manufacturing and construction spending reports.
The euro had been supported earlier by the 200-day moving average.
It's a similar story in USD/JPY as the pair ticked off 104.00 in the moments before the release but has sunk to 103.51 afterwards.
My thinking is that ISM manufacturing doesn't tell you much about the US economy. I think there is some excitement for the new month and jitters about non-farm payrolls that are exaggerating this move.
I think there's a case for buying the dip. The problem is that you don't want to hold that kind of trade through non-farm payrolls so you have a limited amount of time to unload it.
On construction spending, the headline looks bad at 0.0% vs 0.5% expected but there was a huge revision to June from -0.6% to +0.9% so that more than makes up for the miss. It will skew some growth in GDP from Q3 back to Q2 but, on the whole, the report is good news.