10:34 AM EDT, 05/03/2024 (MT Newswires) -- The US dollar pared earlier losses against all major currencies in North American trade on Friday after the Institute for Supply Management Services PMI slumped and the barometer's prices index climbed sharply for the month of April.

The ISM Services PMI fell to 49.4 in April, from 51.4 previously, surprising a consensus that had looked for an increase to 52.0. The fall and reduced level of the PMI is consistent with recessionary conditions in the US economy's largest sector.

April's decline was led by the current activity component of the index, which fell to 50.9 from 57.4 previously, as new orders and employment fell while prices paid for materials and services surged.

The ISM Prices Index surged to 59.2 in April, from 53.4 previously, after survey respondents from fourteen industries reported increases in prices paid during the month. No industry reported a deceleration of prices.

Friday's report echoed the message on prices seen in Wednesday's ISM Manufacturing PMI and could be taken as further evidence that inflation will be slow and tardy in returning to the Federal Reserve's 2% target.

The data comes after non-farm payrolls, hourly earnings and unemployment figures all missed expectations for April, leading the US dollar to fall heavily against all major currencies ahead of the weekend. Payroll growth was softer at 175,000 in April, down from 303,000 previously, while average hourly earnings growth moderated to 0.2% in April, down from 0.3% previously.

The payroll data led yields implied by Fed Funds rate futures to fall with the December 2024 contract dropping 12 basis points to 4.88%, from 5.01% previously, suggesting traders again see scope for multiple Fed rate cuts by year-end. However, this move was pared back in the wake of the ISM Services PMI on Friday.

EUR/USD was quoted 0.34% higher at 1.0760 following the ISM report after falling from an intraday high of 1.0813. GBP/USD was quoted 0.06% higher at 1.2476 after falling from an intraday high of 1.2635. USD/JPY was quoted 0.49% lower at 152.88 after rising from an intraday low of 151.85 and USD/CAD was quoted 0.06% higher at 1.3679 after rising from 1.3605.