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Weak Economic Data Weigh On Dollar

Weak Economic Data Weigh On Dollar

The U.S. dollar turned weak and slipped into the negative zone Wednesday mid morning, after having edged higher from previous close in the European session.

The retreat was due to a report from data from payroll processor ADP that showed private sector job growth in the U.S. improved less than expected in the month of September.

ADP said private sector employment climbed by 135,000 jobs in September, as against forecast for an increase of about 140,000 jobs. The report also showed a significant downward revision to the increase in jobs in August, which was slashed to 157,000 jobs from the originally reported 195,000 jobs.

On Tuesday, a report from the Institute for Supply Management showed a contraction in U.S. manufacturing activity. The ISM’s purchasing managers index dropped to 47.8 in September from 49.1 in August, and down notably from forecasts for a reading of 50.1. That was the lowest level for the index since it hit 46.3 in June 2009, the last month of the Great Recession.

The dollar index, which declined 98.96, recovered some lost ground, but was still down in negative territory at 99.02 by 4 pm ET.

The euro was up 0.27% against the dollar, with a unit of the European currency fetching $1.0962, compared to $1.0932 late Tuesday.

Against Pound Sterling, the dollar was up marginally at 1.2294, compared to 1.2305 on Tuesday. The sterling was trading at $1.2227 early on in the session, but recovered well subsequently.

Pound’s recovery was due to Prime Minister Boris Johnson’s promising speech in Manchester, where he reiterated his intention to “get Brexit done.”

The final Brexit deal to be presented to the European Union is believed to have constructive and reasonable proposals which provide a compromise for both sides, the PM said at Conservatives’ annual conference.

The Japanese yen strengthened to 107.16 a dollar, from its previous close of 107.75 yen a dollar.

The greenback was up notably against the loonie at 1.3322, while it was little changed against the Aussie with the pair trading at 0.6704.

The dollar was gaining about 0.35% against Swiss franc, at 1.3322 and 0.9971,

Swiss consumer price inflation eased to the lowest in 33 months in September, data from the Federal Statistical Office showed Wednesday.

Inflation eased to 0.1% in September from 0.3% in August. Economists had forecast the rate to remain unchanged at 0.3%.

Consumer prices have logged annual increase since January 2017 and the latest rise was the weakest in the current sequence of growth.

On a monthly basis, consumer prices dropped unexpectedly by 0.1% largely driven by falling holiday packages costs and petrol.

The material has been provided by InstaForex Company – www.instaforex.com