Today's ISM non-manufacturing index rose to 54.3 in July from June's 53.8, and beat expectations that had the index declining further to 53.0. The news helped to spur some US Dollar buying, with a big jump in the EUR/USD and USD/JPY pairs in favor of the greenback.

Not only is the data a relief in terms of the string of weaker-than-expected readings we have been seeing out of the US, and the internals even showed the employment sub-index moving above 50.

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What this report likely does is cool the markets rush to price in further quantitative easing steps from the Federal Reserve, which meets to discuss policy next week.

Earlier in the session the ADP employment change report showed private companies adding 42K workers in July, a figure slightly above the 38K forecast.

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From the breakdown of the ADP report, we see that it was the services sector adding jobs in July, as that sector added 63K jobs, while the goods-producing sector shed 21K.

With the manufacturing sector cooling now that the inventory restocking process is nearly complete, its up to the services sector to take the baton of job growth. That was why today's ISM services report may have come as a welcome sign.

In currency markets, this week has seen the Dollar fall vs the Euro and Yen considerable, with the EUR/USD pair hitting a 4-month high at 1.3250 in yesterday's session and the USD/JPY hitting an 8-month low overnight.

Yesterday, there was talk that the Fed may buy new mortgage or Treasury bonds when its mortgage-bond holdings mature, instead of allowing its portfolio to shrink - as it expected. That would in effect prevent tightening in monetary policy and could be a precursor to more steps to pump money into the economy.

It seems that today's data may have helped to ease those concerns, and the market is covering some of those short bets against the US Dollar, espeically in the EUR/USD and USD/JPY pairs. However, we still have the very important monthly non-farm payroll report coming up on Friday, but it seems that for now the Fed has put away its panic button and unless we have a horrid jobs report we may wait till next meeting before we hear further talk of quantitative easing..