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Forex News: Dollar Muted After Strong ADP Private Payrolls Data;

Dollar Muted After Strong ADP Private Payrolls Data; Fed Decision In Focus

05/01/2019 - 09:02:00 (RTTNews)

(RTTNews) - The U.S. dollar showed muted trading against its major counterparts in the European session on Wednesday, after ADP private sector employment surged up more than expected in April, while investors awaited the outcome of the Fed meeting for indications on the future trajectory of interest rates.

Data from payroll processor ADP showed that private sector hiring overwhelmed expectations in April following a much weaker than expected job growth in the previous month.

ADP said private sector employment surged up by 275,000 jobs in April after climbing by an upwardly revised 151,000 jobs in March.

Economists had expected employment to increase by about 180,000 jobs compared to the addition of 129,000 jobs originally reported for the previous month.

The Federal Reserve is widely expected to leave interest rates unchanged when it ends a two-day policy meeting later in the day.

Traders are likely to keep a close eye on the accompanying statement and Fed Chairman Jerome Powell's subsequent press conference for clues on the outlook for interest rates.

As Fed officials gathered for their two-day meeting that kicked off on Tuesday, Trump urged the central bank to cut interest rates by a full percentage point and inject bond-buying stimulus it launched after the Great Recession.

"Our Federal Reserve has incessantly lifted interest rates, even though inflation is very low, and instituted a very big dose of quantitative tightening," Trump said in a post on Twitter.

The ADP report serves as a useful precursor to the Labor Department' monthly payrolls data, due Friday.

Economists expect the economy to have added 187,000 jobs in April, with a jobless rate of 3.8 percent.

The currency held steady against its major counterparts in the Asian session.

The greenback declined to more than a 2-week low of 1.3077 against the pound shortly before the data and held steady thereafter. Next key support for the greenback is seen around the 1.32 level.

Survey data from IHS Markit showed that UK manufacturing expansion slowed to a two-month low in April amid a decline in export business and an easing in the robust pace of stock-building.

The IHS Markit/CIPS Purchasing Managers' Index, or PMI, fell to 53.1 in April from March's 13-month high of 55.1. The score was in line with economists' expectations.

The greenback held steady against the Japanese yen, after having retreated to 111.26 from a high of 111.55 hit at 3:00 am ET. The pair ended Tuesday's trading at 111.42.

The greenback slid to 1.1240 against the euro, an 8-day low, at 5:30 am ET and moved sideways in subsequent deals. The pair was valued at 1.1215 when it closed deals on Tuesday.

After falling to an 8-day low of 1.0152 against the franc around 6:20 am ET, the greenback traded steadily during the course of session. The greenback-franc pair closed yesterday's deals at 1.0191.

The U.S. construction spending for March and ISM manufacturing for April will be released at 10:00 am ET.

The Fed announces its interest rate decision at 2:00 pm ET. Economists widely expect the fed funds rate to remain in a range between 2.25 percent and 2.50 percent.

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