Dollar Extends Gain As Private Sector Jobs Growth Advances To 6-month High
July 01 2015 - 8:39AM
RTTF2
The U.S. dollar extended rally against its major rivals on
Wednesday, as private sector jobs growth outpaced expectations in
June, reinforcing hopes for a September rate hike by the Federal
Reserve.
Data released by payroll processor ADP showed that employment in
the private sector jumped by 237,000 jobs in June following an
upwardly revised increase of 203,000 jobs in May.
Economists had expected an increase of about 220,000 jobs
compared to the addition of 201,000 jobs originally reported for
the previous month.
The private sector job growth in June was the strongest since an
increase of 275,000 jobs last December.
Traders await Markit's manufacturing PMI and ISM manufacturing
index, due shortly, for more clues about the economy.
The ADP data is viewed as a rough guide to official non-farm
payrolls report, which will be released tomorrow due to a federal
holiday in the U.S. on Friday. The economy is expected to show a
creation of 225,000 jobs in June, with an unemployment rate of 5.4
percent.
Market participants are now pricing in a September hike by the
Fed, as a number of Fed officials signaled such a move depending
upon the strength of recovery.
The greenback was trading in a positive territory in the
previous session, after Tuesday's upbeat consumer confidence report
sparked hopes that Fed is on track to raise rates this year.
The greenback rallied to 1.5634 against the pound, its strongest
since June 17, and was up by 0.5 percent from Tuesday's closing
value of 1.5712. The greenback is seen finding resistance around
the 1.55 zone.
Survey data from Markit Economics showed that British
manufacturing sector expanded for the twenty-seventh consecutive
month in June, though the pace of growth unexpectedly eased to its
weakest in 26 months due to moderation of growth in production and
new orders.
The seasonally adjusted Markit/CIPS Purchasing Manager's Index
dropped to 51.4 in June from 51.9 in May, which was revised from
52. Economists had expected an improvement in the index to 52.5. A
PMI reading above 50 suggests expansion in the sector.
The greenback advanced to 0.9439 against the Swiss franc for the
first time since June 5. This is a 1 percent appreciation from
yesterday's closing quote of 0.9345. Continuation of the
greenback's uptrend may take it to a resistance surrounding the
0.97 mark.
The greenback that ended yesterday's trading at 122.48 against
the yen rose to a 2-day high of 123.14. If the greenback extends
rise, it may challenge resistance around the 124.00 area.
Reversing direction, the greenback rose back to a 2-day high of
1.1074 against the European currency. The pair was valued at 1.1140
when it ended Tuesday's trading. Next key resistance for the
greenback may be located around the 1.09 level.
Final data from Markit showed that the euro area manufacturing
sector expanded as initially estimated in June.
The Purchasing Managers' Index rose to 52.5 in June from 52.2 in
May. The reading came in line with flash estimate published on June
23. It was the highest reading since April 2014.
Extending early rise, the greenback spiked up to nearly a 4-week
high of 1.2545 against the Canadian dollar. On the upside, 1.27 is
seen as next resistance level for the greenback. At Tuesday's
close, the pair was worth 1.2487.
The greenback was trading higher at 0.6750 against the kiwi and
0.7664 against the aussie, reversing from an early low of 0.6810
and a 5-day low of 0.7738, respectively. The greenback is likely to
test resistance around 0.66 against the kiwi and 0.76 against the
aussie.
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