Dollar Slips Further Against Trading Partners
The US dollar declined against its major trading partners early Wednesday as the lead-up to Friday’s January employment report starts with the release of ADP private payrolls on Wednesday which is expected to show a gain of 184,000 jobs following an 807,000 surge in the previous month.
Also scheduled for release on Wednesday is the Treasury’s quarterly refunding announcement and weekly EIA oil stocks. Earlier the Mortgage Bankers Association said that mortgage applications rebounded by 12% last week.
Weekly initial jobless claims data and the ISM services report will be released on Thursday when markets will also focus on the policy meetings for the Bank of England and the European Central Bank. Read: US 30-Year Auction High Yield Slips, Demand Slightly Higher
A quick summary of foreign exchange action heading into Wednesday shows that EUR-USD rose to 1.1318 from 1.1274 at the Tuesday US close and 1.1278 a day earlier, lifted by a surprise acceleration in European consumer prices earlier on Wednesday.
The timing of the report is not likely to sway the European Central Bank toward a rate increase when it meets on Thursday but could impact its forward guidance regarding future actions, especially after improvements in Eurozone manufacturing PMI and unemployment.
GBP-USD rose to 1.3566 from 1.3525 at the Tuesday US close and was up sharply from 1.3496 a day earlier. There are no UK data on the Wednesday schedule and only the UK services PMI will be released before the Bank of England’s monetary policy meeting on Thursday.
Markets have already priced in a rate increase at the meeting, with expectations for more if wage and price inflation remain brisk. USD-JPY fell further to 114.3317 from 114.6882 at the Tuesday US close and 114.6478 at the same point a day ago, continuing the recent slide after last week’s sharp gains.
Higher Japanese bond yields and the dampening effect of less-hawkish Federal Reserve officials this week are weighing on the pair after breaching 115 following the FOMC meeting a week ago. There are no Japanese data on Wednesday’s schedule.
USD-CAD declined modestly to 1.2672 from 1.2683 at the Tuesday US close and from 1.2693 a day earlier. Canadian building permits are scheduled to be released today, followed by speeches by Bank of Canada officials later in the day.
The highlight of the week is the January employment data on Friday at the same time as the US version. The Fed and the Bank of Canada are both expected to raise interest rates at their respective meetings in March. #Dollar Slips Further Against Trading Partners
