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Forex News: Dollar Climbs As Robust ADP Data Adds To

Dollar Climbs As Robust ADP Data Adds To June Rate Hike Hopes

06/01/2017 - 09:09:00 (RTTNews)

(RTTNews) - The U.S. dollar firmed against its major counterparts in the European session on Thursday, following a data showing better-than-expected addition of U.S. private sector jobs in May, backing hopes that the U.S. Federal Reserve will hike its interest rate in June.

Data from payroll processor ADP showed that U.S. private sector employment increased much more than anticipated in the month of May.

ADP said private sector employment jumped by 253,000 jobs in May after climbing by a revised 174,000 jobs in April.

Economists had expected an increase of about 185,000 jobs compared to the addition of 177,000 jobs originally reported for the previous month.

Friday will see the release of monthly nonfarm payrolls data, with economists expecting a gain of 180,000 jobs.

Jobless rate is expected to remain steady at 4.4 percent, the lowest level in a decade.

The probability of a rate hike during the Fed's June meeting stands at 89 percent, according to CME Group's FedWatch tool.

Speaking at an Asian Banking and Finance Symposium in Singapore, San Francisco Fed President John Williams said that a total of three rate hikes this year is appropriate, if the economy strengthens.

"I could imagine if the economy strengthens, four rate increases this year would be appropriate," he told.

The greenback showed mixed performance in the Asian session. While the currency rose against the yen and the pound, it fell against the franc and the euro.

The greenback edged up to 0.9716 against the Swiss franc, after having fallen to near a 7-month low of 0.9665 at 5:15 pm ET. The next possible resistance for the greenback-franc pair is seen around the 0.985 region.

Survey data from Credit Suisse and the logistics association procure.ch showed that Swiss manufacturing growth unexpectedly slowed in May, but the pace of expansion remained strong.

The procure.ch Purchasing Managers' Index dropped to 55.6 from 57.4 in April. Economists had forecast a score of 57.8.

Extending early gains, the greenback firmed to a 3-day high of 111.44 against the Japanese yen. At yesterday's close, the pair was quoted at 110.76. Continuation of the greenback's uptrend may see it challenging resistance around the 113.00 area.

The greenback reached as high as 1.1202 against the euro, after having fallen to a 9-day low of 1.1257 at 10:00 pm ET. If the greenback extends gain, 1.10 is likely seen as its next resistance level.

Final data from IHS Markit and showed that the euro area manufacturing sector gathered further momentum in May as initially estimated.

The manufacturing Purchasing Managers' Index rose to a 73-month high of 57.0 in May, in line with flash estimate, from 56.7 in April. The score signaled expansion in each of the past 47 months.

The greenback traded in a positive territory against the pound with the pair trading at 1.2859. This may be compared to Wednesday's closing value of 1.2891. On the upside, 1.27 is likely seen as the next resistance level for the greenback.

Survey results from IHS Markit and the Chartered Institute of Procurement & Supply showed that UK manufacturing sector growth moderated in May from a three-year high.

The factory Purchasing Managers' Index fell to 56.7 in May from 57.3 in April. Nonetheless, the score was above the expected level of 56.5 and signaled an improvement in conditions for the tenth consecutive month.

Reversing from an early low of 1.3477 against the loonie, the greenback rose to 1.3516. The greenback is seen finding resistance around the 1.36 region.

The greenback spiked up to a 2-day high of 0.7059 against the kiwi and near a 3-week high of 0.7379 against the aussie, off its early lows of 0.7089 and 0.7454, respectively. Further uptrend may see the greenback challenging resistance around 0.69 against the kiwi and 0.72 against the aussie.

The ISM manufacturing for May and construction spending for April are set for release shortly.

For comments and feedback: contact editorial@rttnews.com

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