The 22k decline in Jan ADP is the smallest loss since February 2008, serving to bolster the US data-driven argument for prolonged USD gains, muting criticism that recent USD advances had predominantly emerged on bad news outside the US. USD has another chance to regain composure after a 2-day retreat ahead of the Jan services ISM (15:00 GMT) which is expected to hit as high as 51 from 49.8 in Dec. Especially pertinent for FX, bond & equities will be the EMPLOYMENT COMPONENT of the services ISM, which improved to 43.6 in Dec from 41.7 in Nov and faces improved chances of further nearing the 50 figure. A break above 45.0 would be the highest since Jul 2008, thereby triggering upward revisions in the forecasts for Fridays NFP (exp +50). Watch 10 yr yield nearing 3.70% resistance which helps USDJPY above 91. Gold still fails to break above 1123-25 resistance, which will be needed to prevent retreat below 1070.

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