Non-manufacturing ISM fell to 37.3, a record for the just over ten-year history of this report. The services sector makes up over two-thirds of the US economy and accurately reflects the sharp slowdown in the economy in the wake of the credit deep freeze after Lehman was allowed to go bankrupt. One market pundit says the services sector in the US is in it’s worst recession since 1492…
A barrier option at 92.50 is being defended at te moment, keeping the risk aversion trades afloat for the moment. A break will likely see a further pullback toward the 90.90 low posted in late October. Dealers are on guard regarding USD/JPY and JPY crosses as the BOJ still has the green light from the G7 to intervene at will.
Equity markets have taken the bad news in stride, which may take some of the downward pressure off the risk-aversion trades.
