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Dollar Nosedives As ADP Private Sector Employment Disappoints

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The U.S. dollar drifted lower against its major counterparts in the European session on Wednesday, after the nation's private sector jobs rose much less than forecast in July, as a spike in coronavirus cases has forced some rollbacks in the reopening process.

Data from payroll processor ADP showed a substantial slowdown in private sector job growth in the month of July.

ADP said private sector employment rose by 167,000 jobs in July after soaring by an upwardly revised 4.314 million jobs in June.

Economists had expected employment to surge up by another 1.5 million jobs compared to the 2.369 million job spike originally reported for the previous month.

Data from the Commerce Department showed that the U.S. trade deficit narrowed in the month of June.

The Commerce Department said the trade deficit narrowed to $50.7 billion in June from a revised $54.8 billion in May.

The ADP data is seen as a precursor to the monthly non-farm payrolls report due out on Friday.

U.S. employment is expected to increase by 1.60 million jobs in July after an increase of 4.8 million jobs in June. The unemployment rate is seen falling to 10.5 percent from 11.1 percent.

The currency has been falling against its key counterparts in the previous session, except the franc.

The greenback fell to a 5-day low of 1.1895 against the euro, down by 0.8 percent from a high of 1.1799 set at 2:15 am ET. The pair was worth 1.1802 when it ended deals on Tuesday. The greenback is seen finding support around the 1.20 mark.

Final data from IHS Markit showed that the euro area private sector expanded at the fastest pace since mid-2018 as easing of Covid-19 lockdown restrictions boosted demand and expectations.

The IHS Markit final composite output index rose to 54.9 in July from 48.5 in June. The flash reading was 54.8.

The greenback lost 0.6 percent against the pound, touching a 5-day low of 1.3151. The pound-greenback pair had finished yesterday's trading session at 1.3072. Next near term support for the greenback is likely seen around the 1.34 level.

Data from IHS Markit showed that the UK service sector logged its strongest growth in five years in July as the phased reopening of business operations lifted corporate and household spending.

The final IHS Markit/Chartered Institute of Procurement & Supply services Purchasing Managers' Index rose to 56.5 in July from 47.1 in June. The flash score was 56.6.

The USD/CHF pair was down by 0.8 percent, at a 5-day low of 0.9061. At Tuesday's close, the pair was valued at 0.9132. The greenback may face support around the 0.88 region, if it falls again.

After rising to 105.87 at 7:15 am ET, the greenback turned lower against the yen, weakening 0.5 percent to a 5-day low of 105.32. The pair had closed Tuesday's deals at 105.71. Further fall in the greenback may find support around the 104.00 mark.

Survey from Jibun Bank showed that Japan services sector continued to contract in July, albeit at a slower pace, with a PMI score of 45.4.

That's up from 45.0 in June, although it remains beneath the boom-or-bust line of 50 that separates expansion from contraction.

The greenback depreciated to 1.3235 against the loonie, its lowest level since February 21, and marked a 0.7 percent drop from a high of 1.3330 it logged at 5:30 pm ET. The greenback was trading at 1.3319 per loonie at yesterday's close. The greenback is likely to challenge support around the 1.29 mark.

The greenback registered a drop of 1.1 percent against the aussie, reaching a 1-1/2-year low of 0.7241. The AUD/USD pair had finished deals at 0.7159 on Tuesday. Continuation of the downtrend may lead the currency to a support around the 0.75 region.

Data from the Australian Bureau of Statistics showed that Australia home loans rose a seasonally adjusted 5.5 percent on month in June - coming in at A$12.99 billion.

That follows the 10.2 percent decline in May.

Following a gain to 0.6614 at 5:15 pm ET, the greenback dipped to a 5-day low of 0.6673 against the NZ currency. At yesterday's trading close, the pair was quoted at 0.6622. Should the greenback falls further, it is likely to test support around the 0.68 region.

Data from Statistics New Zealand showed that New Zealand unemployment rate fell a seasonally adjusted 4.0 percent in the second quarter of 2020.

That was down from 4.2 percent in the three months prior and well shy of expectations for 5.8 percent.

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