U.S. Dollar Higher After Robust ADP Data
07 Marzo 2018 - 10:37AM
RTTF2
The U.S. dollar was trading higher against its most major
counterparts in the European session on Wednesday, as U.S. private
sector employment improved more than expected in February,
signaling continued strength in labor market.
Data from payroll processor ADP showed that employment in the
private sector jumped by 235,000 jobs in February after surging up
by a revised 244,000 jobs in January.
Economists had expected an increase of about 195,000 jobs
compared to the addition of 234,000 jobs originally reported for
the previous month.
Meanwhile, data from the Commerce Department showed that U.S.
trade deficit widened more than expected in January, led by a
notable decrease in the value of exports.
The report said the trade deficit widened to $56.6 billion in
January from $53.9 billion in December. The deficit had been
expected to widen to $55.1 billion.
Monetary policy announcements from the Bank of Canada and the
European Central Bank are due today and tomorrow, respectively. The
BoC is expected to stand pat amid uncertainties relating to U.S.
trade tariffs and NAFTA talks. The ECB is also unlikely to change
key rates, but investors await Draghi's press conference for
indications about inflation and the likelihood to drop its easing
bias on quantitative easing.
Investors await U.S. jobs data for February due on Friday to
assess the strength of the labor market. Economists expect hiring
to have picked up to 205,000 in February from 200,000 in the
previous month, and the unemployment rate to fall to 4 percent.
The greenback was lower in the Asian session, as the departure
of White House chief economic adviser Gary Cohn ignited fears that
Trump will go ahead with his plan to impose tariffs and risk a
trade war.
The greenback bounced off to 105.99 against the Japanese yen,
from a 2-day low of 105.46 hit at 6:45 pm ET. Next likely
resistance for the greenback is seen around the 107.00 area.
Preliminary figures from the Cabinet Office showed that Japan's
leading index decreased more-than-expected in January to the
weakest level in eight months.
The leading index, which measures the future economic activity,
dropped to 104.8 in January from 106.6 in December, which was
revised down from 107.4.
Reversing from an early 2-day low of 0.9357 against the Swiss
franc, the greenback advanced to 0.9414. The greenback is seen
finding resistance around the 0.96 region.
Following near a 3-week high of 1.2445 hit at 5:30 am ET, the
greenback reversed direction and was trading higher at 1.2412
versus the euro. On the upside, 1.23 is seen as the next resistance
level for the greenback.
On the flip side, the greenback held steady against the pound,
after rising as high as 1.3846 at 4:30 am ET. The pair was valued
at 1.3885 when it closed deals on Tuesday.
Data from the Lloyds bank subsidiary Halifax and IHS Markit
showed that UK house prices grew at the slowest pace in five years
in February.
House prices increased 1.8 percent year-on-year in three months
to February, slower than the 2.2 percent rise registered in
January. This was the weakest rate since March 2013.
The greenback retreated to 1.2892 against the loonie and 0.7292
against the kiwi, from its early highs of 1.2960 and 0.7271,
respectively. If the greenback falls further, 1.27 and 0.74 are
seen as its next support levels against the loonie and the kiwi,
respectively.
The greenback that pulled back from an early high of 0.7772
against the aussie held steady thereafter. At Tuesday's close, the
pair was worth 0.7828.
Looking ahead, U.S. consumer credit for January and Fed's Beige
book report are scheduled for release shortly.
At 10:00 am ET, the Bank of Canada announces decision on rates.
Economists expect the benchmark rate to remain unchanged at 1.25
percent.
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