The US dollar moved higher against most of its main counterparts on Wednesday, following fresh data today that showed private sector employment surged in March. Employers in the United States hired more workers than expected, which overshadowed the effect of a disappointing reading for an index that tracks business environment.
The ADP Research Institute said earlier today that non-farm private sector employment gained 263,000 jobs in March, which exceeded expectations of a 187,000 gain. The employment number in March was also higher than that of the previous month at 245,000.
Continued gains in the US labor market are expected to prompt the Federal Open Market Committee to maintain its gradual road to higher interest rates. Investors currently believe that the Federal Reserve will raise interest rates twice more this year. Anticipation of higher interest rates often supports the greenback.
Todayâs employment data cancelled out the negative impact of a disappointing reading for the non-manufacturing purchasing managersâ index from the Institute for Supply Management. The index declined to 55.2 in March from 57.6 in February, to disappoint forecasts of a reading at 57.0.
The market is now anticipating the minutes of the latest meeting by the Federal Open Market Committee, which is due to be released later today. The minutes might offer more details on the future outlook of interest rate hikes.
US President Donald Trump and Chinese President Xi Jinping will meet tomorrow to discuss trade relationships between the two largest economies in the world. The talks might touch the subject of currency manipulation in China, which Trump believes gives Chinese goods and imports an unfair advantage. The meeting will be closely watched and, if it raises uncertainty, may push the US dollar down.
EUR/USD traded at 1.0652 as of 16:30 GMT on Wednesday, the lowest level today, after starting the day at 1.0668. GBP/USD was at 1.2474, from 1.2427 as of 06:30 GMT, the pairâs weakest point today. GBP/USD began trading today at 1.2443.
The Dollar Index, which measures the performance of the greenback against a basket of its main counterparts, rose to 100.68 as of 16:30 GMT, from 100.54 yesterday.
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