The U.S. dollar drifted higher against its major rivals in the European session on Wednesday, following the release of a data showing much bigger than expected increase in U.S. private sector employment in September, which cement hopes for another hike by the Federal Reserve in December.
Data from payroll processor ADP showed that private sector employment jumped by 230,000 jobs in September after climbing by an upwardly revised 168,000 jobs in August.
Economists had expected employment to increase by about 185,000 jobs compared to the addition of 163,000 jobs originally reported for the previous month.
The ADP data serves a precursor to the U.S. nonfarm payrolls data, which will be released on Friday.
The report is expected to show employment climbed by about 188,000 jobs in September after jumping by 201,000 jobs in August.
Investors await the ISM Non-Manufacturing PMI for September due at 10:00 ET. The index is seen at 58.0, down from last month’s score of 58.5.
Easing concerns about the new Italian government’s spending plans improved risk sentiment.
A report from the Italian newspaper Corriere della Sera said the government expects to reduce the budget deficit from an estimated 2.4 percent of GDP in 2019 to 2.2 percent in 2020 and 2.0 percent in 2021.
The currency showed mixed trading against its major counterparts in the Asian session. While it rose against the franc and the yen, it fell against the euro and the pound.
The greenback spiked up to 0.9888 against the franc, its highest since August 21. The next possible resistance for the greenback is seen around the 1.01 level.
Having dropped to a 5-day low of 113.52 against the yen at 9:15 pm ET, the greenback changed direction and was trading higher at 113.87. If the greenback rises further, 115.00 is possibly seen as its next resistance level.
The latest survey from Nikkei showed that Japanese services sector continued to expand in September, but at a sharply slower pace, with a two-year low score of 50.2.
That’s down from 51.5 in August, although it remains barely above the boom-or-bust line of 50 that separates expansion from contraction.
Following a 2-day low of 1.1594 hit at 10:15 pm ET, the greenback reversed its course and appreciated to 1.1530 against the euro. On the upside, 1.13 is likely seen as the next resistance level for the greenback.
Survey data from IHS Markit showed that the euro area private sector expanded at the slowest pace in four months in September on weak manufacturing activity.
The final composite output index dropped to 54.1 in September from 54.5 in August and slightly below the flash estimate of 54.2.
Reversing from a low of 1.3017 hit at 4:45 am ET, the greenback snapped back to 1.2963 against the pound in the European session. The pair held steady thereafter. At yesterday’s close, the pair was worth 1.2979.
Survey data from IHS Markit showed that British service sector activity maintained strong growth momentum in September.
The IHS Markit/Chartered Institute of Procurement & Supply services Purchasing Managers’ Index dropped to 53.9 in September from 54.3 in August. The index was forecast to fall to 54.0.
The greenback climbed to more than 2-week highs of 0.7142 against the aussie and 0.6548 against the kiwi, reversing from its early lows of 0.7197 and 0.6594, respectively. The greenback is seen finding resistance around 0.70 against the aussie and 0.64 against the kiwi.
The greenback remained higher at a 2-day high of 1.2844 against the loonie, after having dropped to 1.2807 at 10:00 pm ET. The greenback is likely to challenge resistance around the 1.30 mark.
The U.S. ISM non-manufacturing composite index for September will be out in the New York session.
At 2:00 pm ET, Federal Reserve Governor Lael Brainard speaks about the payment system at the FedPayments Improvement Community Forum in Chicago.
Fifteen minutes later, Federal Reserve Bank of Cleveland President Loretta Mester will speak at the Community Banking in the 21st Century conference at the Federal Reserve Bank of St. Louis.