Daily Market Review - 1/6/2014

The euro rose against the dollar on Monday after a widely-watched barometer of U.S. service-sector activity disappointed investors and sent them selling the greenback for profits, ending gains posted on expectations for the Federal Reserve to hasten the pace at which it dismantles stimulus programs.

In U.S. trading, EUR/USD was trading at 1.3638, up 0.36%, up from a session low of 1.3572 and off a high of 1.3651.

The pair was likely to find support at 1.3572, the earlier low, and resistance at 1.3775, Thursday's high.

The dollar took a hit after the Institute of Supply Management said its non-manufacturing purchasing managers' index fell to 53.0 in December from 53.9 in November. Analysts were expecting the index to increase to 54.5.

The new orders index contracted after 52 consecutive months of growth for the first time since July 2009, falling to 49.4. The employment index ticked up to 55.8, indicating growth in employment for the 17th consecutive month and at a faster rate.

The Federal Reserve recently trimmed USD10 billion from its USD85 billion in monthly asset purchases and has said it will pay close attention to data when deciding to taper the program any more.

Fed asset purchases weaken the dollar by keeping interest rates and sending investors to asset-classes like stocks or gold as long as they remain in effect.

Meanwhile, in the euro zone, data released on Monday showed that the bloc's services PMI came in at 51.0 in December, unchanged from the preliminary estimate and down slightly from 51.2 in November.

Separate reports showed that activity in Spain's private sector expanded at the fastest rate in 77 months, but activity in France and Italy contracted last month.

The euro was up against the pound, with EUR/GBP gaining 0.39% to 0.8308, and down against the yen, with EUR/JPY trading down 0.10% 142.34.

On Tuesday, Germany is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity, as well as data on the change in the number of people unemployed.

The euro zone is to produce preliminary data on consumer inflation.

The U.S. is to publish data on the country's trade balance.