The US dollar weakened across the board today despite a stronger than expected non-manufacturing ISM report. As indicated in Friday’s Daily Fundamentals, the strength was not surprising since the service sector added jobs for the third month in a row. Even though the weakness of the US economy and the turmoil in the financial markets suggested further deterioration in the service sector, it remained suspicious that if the contraction exacerbated, hiring would not have increased. For this reason and the fact that non-manufacturing ISM was released after non-farm payrolls, the market did not have a lasting reaction to the number. In the past, non-manufacturing ISM has been very market moving because the employment component of the report is a good leading indicator for non-farm payrolls. The new orders and business activity components of the report also deteriorated, reflecting weakness underneath the headline number. The drop in the US dollar today could have also been attributed to the new record high in oil prices and news from the Federal Reserve that the number of US banks tightening lending to companies and consumers hit a record high. Life is becoming very difficult for the average American and that strain is being reflected in the dollar. However with the European Central bank and Bank of England interest rate meetings looming, we still believe that the US dollar could resume its rise. Traders just need to be selective of the currency pair they choose to use to express their dollar bullish views. In the meantime, there is no meaningful US economic data until Wednesday.