NEW YORK: The dollar edged higher on Wednesday, recovering from two-month lows hit the previous session, as investors lightened their short positions to book profits ahead of the all-important US non-farm payrolls report on Friday.
The underlying trend though for the dollar remained tilted to the downside and Wednesday’s US private sector jobs numbers affirmed that. The data supported the view that the Federal Reserve may not need to raise rates much further.
In late morning trading, the dollar index rose 0.2% to 101.75, led by gains against the euro, which fell 0.3% to $1.0925.
The ADP National Employment report showed US private employers hired far fewer workers than expected in March, suggesting a cooling labor market. Private employment increased by 145,000 jobs last month. Economists polled by Reuters had forecast private employment increasing 200,000.
The data came after Tuesday’s report showing a decline in job openings for February and an increase in firings, as well as a weak US manufacturing survey from the Institute for Supply Management, which also pointed to a soft employment component.
Another report on Wednesday also indicated continued economic weakness, this time in the services sector. That industry slowed more than expected in March as demand cooled, while a measure of prices paid by services businesses fell to the lowest in nearly three years.
The ISM’s non-manufacturing index fell to 51.2 last month from 55.1 in February, while the prices paid component declined to 59.5 from 65.6 in February with the services sector’s employment indicator sliding as well to 45.8 from 47.6 in February.
The dollar headed for a third daily loss against the Japanese yen, falling 0.6% to 130.92. Against the Swiss franc, the greenback was last down 0.1% at 0.9047 francs
The Australian dollar though tumbled 0.6% against the US currency to US$0.6714, a day after the central bank left rates unchanged at 3.6% following 10 straight hikes, saying it needed more time to assess the impact of past increases.
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