The U.S. dollar lost ground against most of its major rivals on Wednesday after data showed a much smaller than expected increase in U.S. private sector employment in the month of August.
Traders also looked ahead to the upcoming non-farm payrolls data, due on Friday, for clues about the central bank's likely stance with regard to its monthly bond-buying program.
According to the data released by payroll processor ADP this morning, private sector employment in the U.S. climbed by 374,000 jobs in August after rising by a downwardly revised 326,000 jobs in July.
Economists had expected employment to jump by 613,000 jobs compared to the addition of 330,000 jobs originally reported for the previous month.
The non-farm payrolls data, due this Friday, is expected to show an addition of 750,000 jobs in August, down from a rise of 943,000 jobs in July. The unemployment rate is expected to drop to 5.2% in August from 5.4% in the previous month.
Fed Chair Jerome Powell said last week that the central bank is likely to start scaling back bond purchases this year depending upon the improvement in the labor market.
A separate report from the Institute for Supply Management showed manufacturing activity in the U.S. unexpectedly grew at a slightly faster rate in the month of August.
The ISM said its manufacturing PMI inched up to 59.9 in August from 59.5 in July, with a reading above 50 indicating growth in the sector. The uptick surprised economists, who had expected the index to dip to 58.6.
The dollar index, which dropped to 92.38 a little past noon, is currently at 92.52, down more than 0.1% from the previous close.
Against the Euro, the dollar has weakened to 1.1840, easing from $1.1809. The euro area manufacturing logged another strong growth in August but the pace of momentum waned as supply issues weighed on production, final data from IHS Markit showed.
The euro area unemployment rate declined to 7.6% in July from 7.8% a month earlier. In the same period last year, the jobless rate was 8.4%.
The pound sterling is fetching $1.3768 a unit, nearly 0.1% up from Tuesday's close of $1.3756. UK manufacturers reported a slower growth in August amid rising constraints caused by supply chain issues, final survey results from IHS Markit showed.
The final IHS Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index fell to a five-month low of 60.3, a tick below July's 60.4. The flash reading was 60.1.
The Yen is down slightly at 110.04 a dollar. The manufacturing sector in Japan continued to expand in August, albeit at a slower pace, the latest report from Jibun Bank showed on Wednesday with a manufacturing PMI score of 52.7. That's down from 53.0 in July, although it remains above the boom-or-bust line of 50 that separates expansion from contraction.
Against the Aussie, the dollar has weakened to 0.7367 from 0.7316. Australia's current account surplus widened to a record high in the June quarter, while the manufacturing sector expanded at a slower pace in August, separate reports showed.
The Swiss franc is down slightly against the dollar at 0.9157. The procure.ch and Credit Suisse Manufacturing PMI for Switzerland fell to 67.7 in August from a record high of 71.1 in July, and better than forecasts of 67.3.
The Loonie is weaker against the dollar at 1.2625, easing from 1.2582 it touched in the European session. The IHS Markit Canada Manufacturing PMI rose to 57.2 in July of 2021 from 56.2 in the previous month, pointing to the 14th straight month of expansion of factory activity. It was the fourth strongest in the survey's history.
The material has been provided by InstaForex Company - www.instaforex.com
source http://www.mt5.com/forex_news/quickview/2182067/
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