The dollar is currently down against its major competitors on Wednesday, as investors await the announcement from the FOMC policy meeting. The Fed is expected to leave the fed funds target rate unchanged at a range of zero to 0.25 percent.
Another reason for the modest activity at the middle of the trading week is that a number of Asian and European equity markets were closed for a holiday.
In another sign of a slowdown by the U.S. labor market, payroll processor Automatic Data Processing, Inc. (ADP) released a report on Wednesday showing that private sector employment increased by much less than expected in the month of April.
ADP said private sector employment increased by 119,000 jobs in April following a downwardly revised increase of 131,000 jobs in March. Economists had expected employment to increase by about 155,000 jobs compared to the addition of 158,000 jobs originally reported for the previous month.
Activity in the U.S. manufacturing sector expanded at the slowest rate of the year in April, according to a report released by the Institute for Supply Management on Wednesday. The ISM said its purchasing managers' index fell to 50.7 in April from 51.3 in March, although a reading above 50 still indicates growth in the manufacturing sector. Economists had expected the index to edge down to a reading of 51.0.
With spending on public construction showing a substantial drop in the month of March, the Commerce Department released a report on Wednesday showing an unexpected decrease in total construction spending for the month.
The report showed that construction spending fell 1.7 percent to an annual rate of $856.7 billion in March from the revised February estimate of $871.2 billion. The decrease came as a surprise to economists, who had expected spending to increase by 0.6 percent.
The European Central Bank may cut interest rates on Thursday as the 17-nation economy has shown increasing weakness in recent weeks. However, economists think a reduction in rates without accompanying efforts to boost bank lending is unlikely to make much difference at this juncture.
The Governing Council led by ECB President Mario Draghi is set to meet in the Slovak capital of Bratislava, where it is expected to announce a reduction in the main refinancing rate, or the refi, by a quarter-basis point to 0.5 percent. The bank has held the rate steady at 0.75 percent for nine consecutive months.
Meanwhile, the bank is expected to leave the deposit rate that is already at zero, untouched. The marginal lending facility rate is also likely to be left unchanged at 1.50 percent.
Moody's Investors Service downgraded Slovenia's credit rating to 'junk' on Tuesday, fueling concerns that the euro member will be the next in line to ask for an EU bailout.
Slovenia's government bond rating was cut to Ba1 from Baa2 with a 'negative' outlook. Moody's said the risk that Slovenia may require external assistance to meet its financial obligations has increased, largely due to uncertain funding environment.
According to the rating agency, the decision to lower the rating was driven by the state of Slovenia's banking sector, a marked deterioration of the government balance sheet and uncertain funding prospects.
The dollar fell to a 2-month low of $1.3242 against the Euro early Wednesday, but has since rebounded to around $1.3200.
The British economy is starting to heal and there is reason for hope if it can sustain the growth momentum, Bank of England Deputy Governor Paul Tucker said in remarks published in a newspaper on Wednesday.
"If we can just sustain it for a few more quarters we really can begin to turn the corner again," he told the Journal during his visit to northeast England.
"We shouldn't get too excited by one quarter but looking over the past year it's perhaps not as bad as the headline figures suggest, so I think there's a long way to go but there's certainly reason for hope," Tucker said.
The greenback has weakened slightly against the pound sterling on Wednesday, falling to a 2 1/2 month low of $1.5594.
The slump in the U.K. manufacturing activity eased at more-than-expected in April on a renewed expansion in new orders, suggesting that growth would gather momentum in the second quarter after the economy averted a triple-dip recession at the beginning of the year.
The seasonally adjusted purchasing managers' index for the manufacturing sector rose to 49.8 in April from March's revised reading of 48.6, a survey by Markit Economics and the Chartered Institute of Purchasing and Logistics (CIPS) showed Wednesday. Economists had forecast the index to rise to 48.5 from the previous month's originally reported reading of 48.3.
House prices in the U.K. declined slightly in April after staying flat in the previous month, results of a survey by the Nationwide Building Society revealed on Wednesday. The mortgage lender expects activity levels to strengthen in the coming months supported by the government's revised credit scheme. The modest drop in prices was in contrast to expectations for an increase.
The house price index slid a seasonally adjusted 0.1 percent from March, when they recorded no change. Prices were forecast to rise 0.3 percent.
The buck rose to an early high of Y97.667 against the Japanese Yen on Wednesday, but has since pulled back to around Y97.220, nearly unchanged for the session.
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Market Analysis
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.