Euro opened the New York session at 1.3170 (8:00 am) about mid-way in the combined 1.3159-97 Asian and European range. The dominant market reaction was simple, sell any rise toward 1.3200.
Between the open and the 10:00 am release of the August Institute for Supply Management purchasing managers' index movement was contained in a twenty point band 1.3159-1.319.
The unexpectedly robust ISM report, 55.7 versus the 54.0 estimate and July's 55.4 gave the dollar an immediate boost, running from 1.3170 to 1.3144 within five minutes. Among the component indices, new orders were a standout soaring to 63.2 from 58.3 for the best reading since June 2011. Exports, imports and prices were higher. Production and employment fell. Construction spending for July issued at the same time was also stronger than forecast at 0.6% on a 0.4% estimate and June's upwardly revised flat score, originally -0.6%.
The 10-year Treasury yield spiked from 2.8392% to 2.8891% in the first five minutes and reached the day's high at 2.9105% about an hour later. After the initial fall the euro bounced back to 1.3170 then traded for about an hour around 1.3160 before taking a final dip to the day's low at 1.3139 at 11:30 am.
Good buying interest at the 200 day moving average at 1.3146 and backed up by support at 1.3141 produced a sharp recall at both attempts. After the final selling bout, the euro edged higher, trading between 1.3160 and 1.3170 for most of the afternoon, where it closed.
Equities lost the majority of their early gain in the afternoon. The Dow ended up 23.65 after having been 123 points higher.
Offers are reported above 1.3200 with bids between 1.3120-40.
Dollar/yen began U.S. trading at 99.54 and euro/yen at 131.09 (8:00 am). In front of the ISM both moved in limited ranges, dollar/yen 99.44-60 and the cross 130.91-131.18. The strong ISM result drove dollar/yen from 99.45 to 99.86 within an hour and the cross to 131.40 from 130.95. But the rapid surge belied substantive market interest.
Over the balance of the morning and into the afternoon eur/yen fell through its initial 130.95 start point at 10:00 am to 130.70. The quickest drop was a twenty minute slide from 131.34 to 130.96. The dollar corrected from 99.85 back to 99.25.
As the initial gyrations in equities recovered into positive territory and Treasury yields retained most of their early gains dollar/yen climbed back middle of the day's range at 99.60 and the cross recovered to 131.10.