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Strong ADP Private Sector Job Growth Buoys Dollar

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The U.S. dollar was higher against its key counterparts in the European session on Wednesday, as ADP private sector employment grew more than forecast in January, while investors await the outcome of a Federal Reserve meeting later in the day for policy clues.

Data from the payroll processor ADP showed that U.S. private sector employment exceeded analyst estimates in January, although the pace of job growth slowed from last month.

ADP said private sector employment jumped by 213,000 jobs in January after soaring by a downwardly revised 263,000 jobs in December.

Economists had expected employment to increase by about 178,000 jobs compared to the spike of 271,000 jobs originally reported for the previous month.

The Fed decision is due at 2:00 pm ET, with economists widely expecting it to keep federal funds rate at 2.25 - 2.50 percent.

Investors focus on press conference by Fed Chair Jerome Powell for more details about the central bank's ongoing balance sheet unwind and rate hike cycle.

All important U.S. non-farm payrolls data for January is due on Friday.

U.S. job growth is expected to slow by 165,000 jobs in January from 312,000 jobs in December. The jobless rate is expected to remain at 3.9 percent.

The currency was lower against its most major counterparts in the Asian session, as investors awaited the Fed decision amid hopes that it will stick on with its patient stance on policy normalization.

The greenback added 0.3 percent to a 2-day high of 109.58 versus the yen, from a low of 109.21 seen at 8:45 pm ET. The pair finished Tuesday's trading at 109.38. Next key resistance for the greenback is seen around the 111.00 mark.

Data from the Ministry of Economy, Trade and Industry showed that Japan retail sales rose a seasonally adjusted 0.9 percent on month in December. That exceeded expectations for an increase of 0.4 percent following the downwardly revised 1.1 percent decline in November.

The U.S. dollar strengthened to a weekly high of 0.9987 against the Swiss franc, after a 0.5 percent fall to 0.9940 at 5:15 pm ET. The dollar was worth 0.9942 against the franc when it ended deals on Tuesday. The greenback is seen finding resistance around the 1.01 level.

The U.S. dollar was up 0.3 percent at 1.1418 against the euro, following a decline to a session's low of 1.1450 at 1:45 am ET. At Tuesday's close, the pair was valued at 1.1431. On the upside, 1.11 is possibly seen as the next resistance level for the greenback.

Survey data from the European Commission showed that Eurozone's economic sentiment weakened for a seventh month in a row in January to its lowest level in over two years, driven by a sharp deterioration in industrial confidence caused by the lingering uncertainties linked to Brexit, global trade tensions and political threats such as protectionism.

The economic sentiment indicator fell to 106.2 from December's 107.4.

The U.S. currency bounced off to 1.3070 against the pound, reversing from a low of 1.3122 touched at 4:00 am ET. The greenback is poised to target resistance around the 1.29 mark.

Reversing from a low of 0.6857 hit at 1:45 am ET, the dollar recovered to 0.6824 against the kiwi. The kiwi-greenback pair ended yesterday's deals at 0.6834. The greenback is likely to test resistance around the 0.67 level, if it advances again.

The U.S. dollar reclaimed some of its lost ground against the aussie with the pair trading at 0.7185. This follows a 2-day low of 0.7204 hit at 6:30 am ET. The aussie-greenback pair was quoted at 0.7155 at yesterday's New York session close. Continuation of the greenback's uptrend may see it challenging resistance around the 0.69 level.

Data from the Australian Bureau of Statistics showed that Australia's consumer prices rose 0.4 percent on quarter in the fourth quarter of 2018- unchanged from Q3 and in line with expectations.

On a yearly basis, inflation advanced 1.8 percent - exceeding expectations for 1.7 percent and down from 1.9 percent in the three months prior.

On the flip side, the greenback weakened to a 2-day low of 1.3213 against the loonie, down from a high of 1.3281 recorded at 7:15 pm ET. The dollar closed yesterday's deals at 1.3269 per loonie. Further downtrend may take the greenback to a support around the 1.31 level.

The U.S. pending home sales data for December is scheduled for release at 10:00 am ET.

At 2:00 pm ET, the Fed announces its decision on interest rate. Economists widely expect the federal funds rate to be kept at 2.50 percent.

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