The U.S. dollar drifted higher against its major trading partners in the European session on Thursday, after a data showed that the nation’s private sector job growth accelerated more than expected in May, suggesting that the labor market recovery remains on track amid the reopening of the economy.

Data from payroll processor ADP showed that private sector employment soared by 978,000 jobs in May after surging by a downwardly revised 654,000 jobs in April.

Economists had expected private sector employment to increase by 650,000 jobs compared to the addition of 742,000 jobs originally reported for the previous month.

Data from the Labor Department showed a modest decrease in first-time claims for U.S. unemployment benefits in the week ended May 29.

The report said initial jobless claims dipped to 385,000, a decrease of 20,000 from the previous week’s revised level of 405,000.

Economists had expected jobless claims to edge down to 395,000 from the 406,000 originally reported for the previous week.

Investors focus on the monthly U.S. jobs report due on Friday, which could offer cues on the economic recovery and the interest rate outlook.

Economists expect a job growth of 650,000, compared to an increase of 266,000 jobs in April. The jobless rate is expected to fall to 5.9 percent from 6.1 percent in the previous month.

Philadelphia Fed President Patrick Harker said on Wednesday that it is appropriate to begin discussing the time frame for tapering the bond buying program.

The dollar rose in the Asian session, as investors awaited key U.S. economic data to gauge the strength of the economic recovery.

The USD/CHF pair gained 0.5 percent, touching 0.9021. At Wednesday’s close, the pair was valued at 0.8977. Immediate resistance for the dollar is likely seen around the 0.92 level.

The greenback added 0.5 percent to hit a 6-day high of 110.09 against the yen. The pair was worth 109.52 when it ended deals on Wednesday. Further rally in the currency may challenge resistance around the 112.00 level.

Survey from Jibun Bank showed that Japan’s service sector continued to contract in May, and at a faster pace, with a services PMI score of 46.5.

That’s up from 49.5 in April and it moves further beneath the boom-or-bust line of 50 that separates expansion from contraction.

The greenback rose to a 6-day high of 1.2147 against the euro, up around 0.5 percent on the day. The pair had closed Wednesday’s deals at 1.2209. The greenback may face resistance around the 1.20 region, if it gains again.

Final data from IHS Markit showed that the euro area private sector growth improved more than initially estimated in May driven by the resurgence in the services economy amid easing of the COVID-19 related restrictions.

The final composite output index rose to 57.1 in May from 53.8 in April. The flash reading was 56.9.

The greenback firmed to a 1-week high of 1.4108 against the pound, after having fallen to a 2-day low of 1.4203 at 6 am ET. The pound-greenback pair had finished yesterday’s trading session at 1.4168. The greenback is seen facing resistance around the 1.40 area.

Final data from IHS Markit showed that the UK service sector gained further momentum in May on higher spending in response to looser pandemic restrictions.

The Chartered Institute of Procurement & Supply services Purchasing Managers’ Index rose to 62.9 in May from 61.0 in April and exceeded the flash estimate of 61.8.

The greenback reached as high as 1.2115 against the loonie, recording a 6-day high. This followed a 2-day low of 1.2027 logged at 5 pm ET. The greenback was trading at 1.2034 per loonie at yesterday’s close. Next near term resistance for the greenback is likely seen around the 1.25 level.

The greenback jumped to its highest level since April 14 against the aussie, at 0.7665. The aussie-greenback pair was worth 0.7752 at Wednesday’s close. Extension of the greenback’s upward trading is likely to lead it to a resistance around the 0.72 level.

Data from the Australian Bureau of Statistics showed that Australia’s trade surplus increased notably in April as exports increased amid falling imports.

The trade surplus increased to A$8.02 billion from A$5.79 billion in March. This was above the economists’ forecast of A$7.9 billion.

The greenback appreciated to nearly a 2-week peak of 0.7154 against the kiwi from yesterday’s close of 0.7233. Should the greenback strengthens further, it is likely to test resistance around the 0.70 region.

The material has been provided by InstaForex Company – www.instaforex.com

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