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Forex News: Upbeat ADP Private Payrolls Buoys U.S. Dollar

Upbeat ADP Private Payrolls Buoys U.S. Dollar

04/05/2017 - 09:06:00 (RTTNews)

(RTTNews) - The U.S. dollar strengthened against its major rivals in the European session on Wednesday, as data showed that U.S. private sector employment increased much more than anticipated in March, supporting the likelihood of higher rates in this year.

Data from payroll processor ADP showed that private sector employment soared by 263,000 jobs in March compared to economist estimates for an increase of about 187,000 jobs.

However, the report also said the jump in employment in February was downwardly revised to 245,000 jobs from the previously reported 298,000 jobs.

Investors look forward to the release of the minutes from March's FOMC meeting, at which interest rates were raised by a quarter-point. The minutes may provide information about the Fed's outlook for the economy and trajectory of interest rate hikes.

The monthly U.S. jobs report is due Friday, with economists expecting an addition of 180,000 jobs in March. A better-than-expected reading likely cements chance of a rate hike at the Fed's June meeting.

Also in focus is the upcoming meeting between the Chinese President and US President Donald Trump, with trade agreements and regional tensions to be the key topics.

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

The greenback climbed to 1.0654 against the euro, following a 5-day decline to 1.0689 at 3:15 am ET. The greenback is poised to locate resistance around the 1.05 region.

Final data from IHS Markit showed that Eurozone private sector expanded at the fastest pace in almost six years in March but the pace of growth was slightly weaker than the initial estimate.

The composite output index rose to a 71-month high of 56.4 in March from 56.0 in February but below the flash estimate of 56.7. The index has signaled expansion in each of the past 45 months in March.

The greenback, having fallen to 110.54 against the Japanese yen at 12:00 am ET, reversed direction and advanced to a 2-day high of 111.26. The next possible resistance for the greenback-yen pair is seen around the 112.00 level.

The latest survey from Nikkei showed that Japan's services sector continued to expand in March, and at an accelerated pace, with a 19-month high PMI score of 52.9.

That's up from 51.3 in February, and it moves further above the boom-or-bust line of 50 that separates expansion from contraction.

The greenback firmed to 1.0052 against the Swiss franc, its strongest since March 15, and was 0.3 percent higher from Tuesday's closing value of 1.0019. Continuation of the greenback's uptrend may see it challenging resistance around the 1.03 area.

The greenback appreciated to a 3-week high of 0.6958 against the kiwi, from a low of 0.6984 hit at 4:00 am ET. The greenback may possibly challenge resistance around the 0.67 mark.

The greenback staged a slight rebound to 0.7569 against the aussie following the data, reversing from an early decline of 0.7587.

On the flip side, the greenback held lower against the pound, as the latter was buoyed by upbeat U.K. services survey. The pair was trading at 1.2476, compared to 1.2440 hit late New York Tuesday.

Survey data from IHS Markit and the Chartered Institute of Procurement and Supply showed that British service sector growth accelerated at a faster-than-expected pace in March, driven by solid rises in output and new orders.

The CIPS Purchasing Managers' Index for the services sector rose to 55.0 in March from February's 5-month low of 53.3. Economists had expected the index increase slightly to 53.4.

Looking ahead, Markit's U.S. services PMI for March and crude oil inventories data are slated for release shortly.

At 2:00 pm ET, the Fed releases minutes from the March meeting.

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