The US ISM non-manufacturing index fell less than expected to a reading of 51.7 from 52.0, suggesting that the US services sector is expanding for the second month in a row. A breakdown of the report shows that business activity improved during the month, as new orders and new export orders rose. Meanwhile, the prices paid component rocketed higher, indicating that businesses are finding that their profit margins are being squeezed as they have difficulty passing through the higher costs to customers. Finally, the employment component dipped below 50 to 48.7, suggesting that service-related companies let workers go during the month of May and signaling that this Friday’s non-farm payrolls report could be disappointing. – Terri Belkas, Currency Analyst for DailyFX.com