Slowing ISM Services Overshadows Better than Expected ADP Employment Data

By FXEmpire.com

Despite earlier optimism that spread through markets on Wednesday after the ADP employment report showed U.S. private employers added 114,000 jobs in July more than expectations of 100,000 added jobs, yet pessimism dominated markets once again, as traders fear the S&P rating agency will downgrade the United States longstanding AAA credit rating despite an agreement to raise the debt ceiling and reduce the deficit, while the ISM non-manufacturing index slowed in July to 52.7 below expectations of 53.5, which boosted worries over the outlook of the U.S. economy.

Meanwhile, the European debt crisis resurfaced again in markets, where traders now fear Italy could be the next victim of the debt crisis, as yields on Italian governmental bonds rose above 6%, the highest in more than 10 years, which spread concerns that Italy could soon tap into bailout funds from the EU and the IMF.

Stocks in the United States extended the drop by opening on Wednesday, where the Dow Jones Industrial Average was down by nearly 0.30% to trade around 11,830, while the S&P 500 index was down by nearly 0.20% to trade around 1251. European stock indexes were also lower before closing on Wednesday, where FTSE 100 was down by nearly 1.55% to trade at 5630 and the DAX was down by nearly 1.45% to trade around 6698.

The U.S. dollar dropped against a basket of major currencies on Wednesday, where the U.S. dollar index was trading at 74.08, compared with the opening level at 74.51. The Euro rose strongly against the Dollar, where the EUR/USD pair traded at $1.4305, compared with the opening level at $1.4183, and the British Pound also gained against the Dollar, where the GBP/USD pair traded around $1.6382, compared with the opening level at $1.6278.

Gold prices continued to rise on Wednesday reach a new record high above $1670 an ounce, where gold was trading around $1669 an ounce, and crude oil prices dropped to trade around $92 a barrel.