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Forex News: U.S. Dollar Falls After Weak ADP Private Payrolls

U.S. Dollar Falls After Weak ADP Private Payrolls Data

09/01/2021 - 10:44:00 (RTTNews)

(RTTNews) - The U.S. dollar came under pressure in the European session on Wednesday, as weak ADP private payrolls data eased concerns over an immediate tapering of the Fed's bond buying program.

Data from payroll processor ADP showed that U.S. private sector employment increased much less than expected in the month of August.

ADP said private sector employment climbed by 374,000 jobs in August after rising by a downwardly revised 326,000 jobs in July.

Economists had expected employment to jump by 613,000 jobs compared to the addition of 330,000 jobs originally reported for the previous month.

The ADP data serves a precursor to much anticipated nonfarm payrolls data, which will be released on Friday.

The economy is forecast to add 750,000 jobs in August, down from a rise of 943,000 jobs in July.

The unemployment rate is expected to drop to 5.2 percent in August from 5.4 percent in the previous month.

Fed Chair Jerome Powell said last week that the central bank is likely to start scaling back bond purchases this year depending upon the improvement in the labor market.

The greenback dropped to 1.1841 against the euro, from a 2-day high of 1.1794 seen at 2:15 am ET. The greenback may find support around the 1.20 level.

Final data from IHS Markit showed that the manufacturing Purchasing Managers' Index fell to a six-month low of 61.4 in August from 62.8 in July. The flash reading was 61.5.

This marked a second successive month in which growth has slowed in the sector since June's survey record expansion.

The greenback depreciated to 1.3791 against the pound, after a 5-day rise to 1.3731 at 10:15 pm ET. If the greenback slides further, 1.41 is likely seen as its next support level.

Final survey results from IHS Markit showed that UK manufacturers reported a slower growth in August amid rising constraints caused by supply chain issues.

The final IHS Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index fell to a five-month low of 60.3, a tick below July's 60.4. The flash reading was 60.1.

The greenback pulled back to 0.9148 against the franc, from a 5-day high of 0.9189 set at 2:45 am ET. The greenback is seen finding support around the 0.90 mark.

The greenback was trading at 0.7066 versus the kiwi, down from yesterday's close of 0.7040. Next key support for the currency is seen around the 0.72 level.

Extending its early decline, the greenback hit 0.7360 against the aussie, its lowest level since August 16. Immediate support for the greenback is likely located around the 0.75 level.

The greenback edged down to 1.2581 against the loonie, following a high of 1.2637 hit at 8:45 pm ET. Further fall in the currency may challenge support around the 1.21 level.

Having advanced to near a 3-week high of 110.42 at 3:45 am ET, the greenback reversed direction and slipped to 109.88 against the yen. Should the greenback slides further, 108.5 is possibly seen as its next support level.

Data from Jibun Bank showed that Japan manufacturing sector continued to expand in August, albeit at a slower pace, with a manufacturing PMI score of 52.7.

That's down from 53.0 in July, although it remains above the boom-or-bust line of 50 that separates expansion from contraction.

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