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Forex News: Dollar Weakens As U.S. Service Sector Growth Slows

Dollar Weakens As U.S. Service Sector Growth Slows

08/03/2017 - 10:48:00 (RTTNews)

(RTTNews) - The U.S. dollar slipped against its major rivals in the New York session on Thursday, as the U.S. service sector grew at a notably slower rate in the month of July.

Data from the Institute for Supply Management showed that the non-manufacturing index dropped to 53.9 in July from 57.4 in June, although a reading above 50 still indicates growth in the service sector. Economists had expected the index to edge down to 57.0.

Data from the Labor Department showed a modest decrease in first-time claims for unemployment benefits in the week ended July 29th.

The report said initial jobless claims dipped to 240,000, a decrease of 5,000 from the previous week's revised level of 245,000.

All eyes are on the release of the Labor Department's closely watched monthly jobs report on Friday.

The report is expected to show employment climbed by 183,000 jobs in July, while the unemployment rate is expected to dip to 4.3 percent.

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

The greenback was trading lower at 1.1874 against the euro, compared to Wednesday's closing value of 1.1856. If the greenback extends decline, 1.21 is likely seen as its next support level.

Survey results from IHS Markit showed that the Eurozone private sector grew at the slowest pace in six months in July.

The final composite output index fell to 55.7 in July from 56.3 in June. The score was also below the flash estimate of 55.8.

The greenback hit a 2-day low of 110.10 against the Japanese yen, down from yesterday's closing quote of 110.74. Continuation of the greenback's downtrend may see it challenging support around the 100.00 region.

The latest survey from Nikkei showed Japan's services sector continued to expand in July, albeit at a slower rate, with a PMI score of 52.0.

That's down from 53.3 in June, although it remains well above the boom-or-bust line of 50 that separates expansion from contraction.

The greenback reversed from an early 6-day high of 0.9717 against the franc, easing back to 0.9682. On the downside, 0.95 is likely seen as the next support level for the greenback-franc pair.

The greenback retreated to 0.7954 against the aussie, 0.7434 against the kiwi and 1.2566 against the loonie, from its early 8-day high of 0.7914, 2-week highs of 0.7391 and 1.2619, respectively. The next possible support levels for the greenback are seen around 0.81 against the aussie, 0.76 against the kiwi and 1.24 against the loonie.

On the flip side, the greenback held steady against the pound, after rising to a 3-day peak of 1.3112 in the aftermath of the BoE decision. This may be compared to near an 11-month low of 1.3267 set at 4:30 am ET. The pair finished yesterday's trading at 1.3223.

The Bank of England kept its record low interest rate unchanged in a split vote, as expected, and maintained the size of monetary stimulus.

The Monetary Policy Committee, headed by Governor Mark Carney, voted 6 to 2 to keep the interest rate at a historic low of 0.25 percent.

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