U.S. Dollar Mixed After ADP Private Payrolls Data

The U.S. dollar showed mixed performance against its major rivals in the European session on Wednesday, after a data showed that the nation’s private sector hiring declined much less than forecast in May.

Data from payroll processor ADP showed that the pace of private sector job losses slowed much more than anticipated in the month of May.

ADP said private sector employment slumped by 2.76 million jobs in May after plummeting by a revised 19.557 million jobs in April.

Economists had expected employment to tumble by about 9.0 million jobs compared to 20.236 million job nosedive originally reported for the previous month.

Investors await the release of the ISM non-manufacturing PMI and factory orders at 10:00 am ET.

Weekly jobless claims data is due on Thursday, followed by nonfarm payrolls report on Friday.

Risk sentiment improved after a survey from Caixin/IHS Markit showed China’s services sector purchasing managers’ index jumped to 55.0 in May, the highest since October 2010.

Growing hopes for a global economic recovery after the easing of lockdown restrictions also supported the market.

The currency showed mixed trading against its key counterparts in the Asian session. While it dropped against the euro and the pound, it rose against the yen. Versus the franc, it held steady.

The greenback recovered to 1.2554 against the pound, from a low of 1.2612 set in early deals, which was its lowest level since April 30. The greenback is seen finding resistance around the 1.22 mark.

Data from IHS Markit showed that the UK service providers reported a steep reduction in business activity in May due to a fall in business and consumer spending amid the coronavirus, or Covid-19, pandemic.

The final IHS Markit/Chartered Institute of Procurement & Supply services Purchasing Managers’ Index advanced to 29.0 in May from 13.4 in the previous month. This was above the flash estimate of 27.8.

The greenback was trading at 1.1207 against the euro, slightly up from a 2-1/2-month low of 1.1228 logged at 3:15 am ET. The pair had closed Tuesday’s deals at 1.1169.

Survey results from IHS Markit showed that the euro area private sector contracted sharply in May, but improved from April as lockdown restrictions implemented to prevent the spread of coronavirus loosened in many economies.

The final composite output index rose to 31.9 in May from April’s record low of 13.6. The score was above the flash reading of 30.5.

The greenback remained higher at a 5-day high of 0.9648 versus the franc. At Tuesday’s close, the pair was valued at 0.9622. Next key resistance for the greenback is likely seen around the 0.98 level.

After climbing to a 2-month high of 108.85 in the previous session, the greenback wobbled versus the yen during the European trading session. The pair was trading near Tuesday’s closing value of 108.66.

Looking ahead, at 10:00 am ET, the Bank of Canada announces decision on interest rates. Economists forecast the benchmark rate to remain at 0.25 percent.

In the New York session, U.S. ISM services PMI for May and factory orders for April are set for release.

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