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Forex News: U.S. Dollar Drops After Soft ADP Data; Fed

U.S. Dollar Drops After Soft ADP Data; Fed Decision In Focus

05/04/2022 - 10:30:00 (RTTNews)

(RTTNews) - The U.S. dollar was lower against its most major opponents in the European session on Wednesday, as the nation's private sector job growth slowed more than expected in April and caution prevailed ahead of the Federal Reserve's monetary policy decision that is expected to raise the benchmark interest rate by 50 basis points for the first time since 2000.

The Fed will announce its interest rate decision at 2:00 pm ET.

Money markets are fully pricing in a 50 basis point rate hike by the Fed, which would take the rate to 0.75-1.00 percent.

The Fed is expected to detail plans to shrink its $8.9 trillion balance sheet.

Data from payroll processor ADP showed that private sector employment increased by 247,000 jobs in April after jumping by an upwardly revised 479,000 jobs in March.

Economists had expected private sector employment to surge by 395,000 jobs compared to the addition of 455,000 jobs originally reported for the previous month.

The dollar held steady against its key counterparts in the Asian session, except the pound.

The greenback declined to 1.0556 against the euro, down from Tuesday's close of 1.0519. The greenback may find support around the 1.08 level.

Data from Destatis showed that Germany's exports declined more than expected in March, while imports growth exceeded expectations.

Exports fell 3.3 percent month-on-month in March, in contrast to the 6.2 percent expansion seen in February. Shipments were forecast to drop 2.0 percent.

The greenback edged down to 129.79 against the yen, compared to yesterday's close of 130.14. On the downside, 119.00 is possibly seen as its next support level.

Against the pound, it reached as low as 1.2537. The pound-greenback pair had ended yesterday's trading session at 1.2495. The greenback is seen finding support around the 1.29 level.

The greenback fell to a 5-day low of 1.2804 against the loonie at 6:45 am ET, but it has since rebounded to 1.2835. The greenback was trading at 1.2837 against the loonie at yesterday's close.

The greenback dropped to 0.7151 against the aussie, its lowest level in five days. The greenback was worth 0.7095 per aussie at Tuesday's New York session close. The greenback is poised to find support around the 0.73 level.

The greenback remained lower at 0.6462 against the kiwi. At Tuesday's close, the pair was valued at 0.6431. If the greenback falls further, 0.66 is possibly seen as its next support level.

In contrast, the greenback jumped to 0.9835 against the franc, setting more than a 2-year high. At yesterday's trading close, the pair was quoted at 0.9782. Next key resistance for the currency is seen around the 1.00 level.

At 2:00 pm ET, the Fed announces its decision on interest rate. Economists widely expect the Fed to raise rates by 50 basis points to 1 percent.

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