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Solid ADP Private Sector Job Growth Buoys Dollar

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Solid ADP Private Sector Job Growth Buoys Dollar
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The U.S. dollar spiked higher against its major counterparts in the European session on Wednesday, as a data showed that the nation’s private sector job growth beat forecasts in June, signaling a recovery in the labor market and backing speculation of an early tapering of quantitative easing programme by the U.S. Federal Reserve.

Data from the payroll processor ADP showed that U.S. private sector employment increased more than expected in June.

ADP said private sector employment rose by 692,000 jobs in June after rising by a downwardly revised 886,000 jobs in May.

Economists had expected employment to rise by 600,000 jobs.

Concerns about the economic impact of the delta strain of the virus further lifted the appeal of the safe-haven currency.

The U.S. jobs report is due on Friday, which could help determine the pace of improvement in the labor market.

Economists expect a job growth of 690,000 in June, compared to an increase of 559,000 jobs in May. The jobless rate is expected to fall to 5.7 percent from 5.8 percent in the previous month.

The greenback showed mixed performance against its major peers in the Asian session. While it held steady against the euro and the yen, it rose against the franc. Versus the pound, it dropped.

The greenback added 0.5 percent to 0.9249 against the franc, its biggest level since April 13. At Tuesday’s close, the pair was valued at 0.9205. Next immediate resistance for the greenback is seen around the 0.94 level.

Survey results from the Z?rich-based think tank KOF showed that a leading indicator of the turning points in Switzerland’s economy fell unexpectedly in June, but the reading remained strong signaling a outlook.

The Swiss Economic Barometer dropped to 133.4 from 143.7 in May, which was revised from 143.2.

The greenback touched a 9-day high of 1.1865 against the euro, up from Tuesday’s close of 1.1895. Extension of the greenback’s upward trading is likely to lead it to a resistance around the 1.16 level.

Preliminary data from Eurostat showed that the euro area inflation slowed in June driven by the slowdown in the energy price growth.

Inflation came in at 1.9 percent in June, as expected, down from 2 percent in the previous month.

The greenback bounced off to 1.3817 against the pound, after a fall to 1.3873 at 6:30 am ET. The pound-greenback pair had finished yesterday’s trading session at 1.3829. Immediate resistance for the greenback is likely located around the 1.34 level.

Revised data from the Office for National Statistics showed that the UK economy contracted slightly more than initially estimated in the first quarter as the lockdown restrictions were re-introduced.

Gross domestic product dropped 1.6 percent sequentially instead of 1.5 percent fall estimated previously. GDP was up 1.3 percent in the fourth quarter of 2020.

The greenback rose to a 2-day high of 110.83 against the yen, after having declined to an 8-day low of 110.42 at 4:30 am ET. The pair was worth 110.48 when it ended deals on Tuesday. Next near term resistance for the greenback is seen around the 112.00 level.

Preliminary data from Eurostat showed that the euro area inflation slowed in June driven by the slowdown in the energy price growth.

Inflation came in at 1.9 percent in June, as expected, down from 2 percent in the previous month.

The greenback rallied to a 9-day peak of 0.7493 against the aussie and an 8-day high of 0.6965 against the kiwi, from yesterday’s closing quotes of 0.7509 and 0.6991, respectively. The greenback may find resistance around 0.72 against the aussie and 0.68 against the kiwi.

The greenback, though, dropped to 1.2356 against the loonie, after rising to a 9-day high of 1.2424 at 5 am ET. The greenback was trading at 1.2401 per loonie at yesterday’s close. The greenback is seen finding support around the 1.21 area.

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