• US ISM Services PMI fell into contraction territory in June.
• US Dollar came under heavy selling pressure with the immediate reaction.

Business activity in the US service sector contracted in June, with the ISM Services PMI dropping to 48.8 from 53.8 in May. This reading missed the market expectation of 52.5 by a wide margin. 

Other details of the report showed that the Prices Paid Index, the inflation component, edged lower to 56.3 from 58.1, while the Employment Index slumped to 46.1 from 47.1.

Assessing the survey's findings, "the decrease in the composite index in June is a result of notably lower business activity, a contraction in new orders for the second time since May 2020 and continued contraction in employment," said Steve Miller, Chair of the Institute for Supply Management (ISM) Services Business Survey Committee.

"Survey respondents report that in general, business is flat or lower, and although inflation is easing, some commodities have significantly higher costs," Miller added. "Panelists indicate that slower supplier delivery performance is due primarily to transportation challenges, not increases in demand."