Release Explanation: Similar to the PMI numbers, it surveys Purchase Managers on their sentiment on orders, hiring, inventories, and deliveries. Split into the Service Index (above), and then Service Prices which look at the rate of Inflation when materials and services are purchased. Builds an economic picture of the strength of manufacturing activity ahead of official Government reports. These numbers usually are a pre-cursor to the PMI numbers later in the month. A currency can be very reactive to these numbers as over time they have been a reliable read on Government reports to come.

Trade Desk Thoughts: The service sector of the economy contracted for a fifth straight month in February and at a faster pace, the Institute for Supply Management said today. The non-manufacturing index fell to 41.6 from January's reading of 42.9. Economists had expected the index to fall to 41.0.

Arts, Entertainment & Recreation was the only industry group to report expansion for last month. Wholesale trade showed the sharpest decline.

Within the sub indexes, business activity/production and new orders contracted at a faster pace, while employment, which has now contracted for 10 straight months, contracted more slowly.

Prices and new export orders contracted at a slower pace, while imports and inventories contracted faster.

Producers noted that prices for diesel fuel and gasoline increased, while prices for aluminum and copper decreased.

Respondents from the finance and insurance sectors noted that the credit of a lot of consumers is so poor that half of our deals never make it through our credit committee. Respondents were also concerned about the soft market conditions, the negative outlook for employment and the overall state of the economy.

Forex Technical Reaction: Stocks declined after the report was released and the dollar made some headway against the higher-yielding euro, pound and Australian dollar.