Strong U.S. services PMI puts Fed, dollar and Bitcoin in focus

U.S. Services Purchasing Managers’ Index rose to 58.8 in September, exceeding expectations, while the S&P Global Composite PMI remained at 58.4. Both readings were above 50, the line separating expansion from contraction.

The figures showed that U.S. business activity expanded at a firm pace during the month. Services activity recorded the stronger reading and strengthened the case for a resilient U.S. economy.

The data initially lifted the U.S. dollar and Treasury yields as traders reassessed the Federal Reserve’s interest-rate outlook. Strong services activity can reduce expectations for aggressive rate cuts because the sector represents the largest part of the U.S. economy and continued to expand without lower borrowing costs.

The dollar index held above 102.00. Resistance was at 102.20 to 102.50, while support was at 101.80 to 101.39.

Bitcoin and other risk assets had a mixed response. Strong economic activity can support growth expectations, while expectations for a more cautious Federal Reserve can limit gains in assets sensitive to interest-rate changes. The data also increased the prospect of short-term volatility in Bitcoin and other risk assets.

Gold faced pressure from the dollar and interest-rate outlook. The metal does not generate interest income, so its price is sensitive to real interest rates and the dollar’s value. Spot gold faced resistance at $4,207 to $4,220. Support was at $4,100 to $4,124. A break above resistance could open a path to $4,300, while a break below support could expose $4,034.

Bitcoin faced resistance near $87,570, with support at $84,000 and $82,000. A break above resistance could put $93,700 in view. A move below either support level could lead to further losses. Traders will monitor upcoming U.S. economic data and Federal Reserve signals for indications about the timing and scale of possible rate cuts.