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US Dollar Index Approaches 80.00

H.S. Borji
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US Dollar Index Approaches 80.00

The US dollar rebounded from support Wednesday after the ADP Institute said US employment growth surged in June, prompting some analysts to revise their estimate for nonfarm payrolls.

The US dollar index – a gauge of the greenback’s performance versus six commonly traded peers – advanced 0.2 percent to 79.97.

US employers added 281,000 private sector jobs in June, up from 179,000 the previous month, the ADP Institute reported today. Economists forecast a gain of around 213,000.

The service economy added 230,000 private payrolls in June, up from 148,000 the previous month. The professional/business services sector led the advance with the addition of 77,000 private payrolls. The trade, transportation and utilities sector added 50,000.

Employment growth in the goods-producing sectors rose 51,000 in June, up from 31,000 the previous month. The construction sector added 36,000 jobs last month, more than double the rate of the previous month.

“The job market is steadily improving,” said Moody’s Analytics chief economist Mark Zandi in a press release. “Job gains are broad based across all industries and company sizes. Judging from the job market, the economic recovery remains fully intact and is gaining momentum.”

The Labor Department will produce official nonfarm payrolls data Thursday. June is expected to mark the fifth consecutive month US employers added more than 200,000 jobs, the first such feat since 1999-2000.

The US dollar rebounded from a six-month low against its Canadian counterpart. The USDCAD was trading at 1.0662, advancing 0.28 percent. Initial support is likely found at 1.0597 and resistance at 1.0664. The pair rebounded from an intraday low of 1.0625 after the loonie strengthened on the heels of Chinese manufacturing data.

China’s manufacturing sector in June rose to a six-month high, according to the HSBC/Markit purchasing managers’ index. The monthly PMI reading advanced 1.3 percentage points to 50.7.

The greenback rebounded against the Japanese yen, as the USDJPY advanced 0.25 percent to 101.78. The pair faces initial support at 101.34 and resistance at 101.80.

Markit Group on Thursday is scheduled to report on the Japanese service economy.

The euro weakened against the US dollar ahead of a key rate statement from the European Central Bank. The ECB, having cut its benchmark lending rate to 0.15 percent and set the deposit rate at -0.1 percent, is not expected to make any changes to monetary policy Thursday.

The EURUSD declined 0.19 percent to 1.3650. The pair faces initial support at 1.3645 and resistance at 1.395, which is above the 200-day moving average of 1.3674.

The British pound edged higher against the US dollar as UK house prices continued to rise at a strong pace. UK house prices increased at an annualized rate of 11.8 percent in June, up from the 11.1 percent pace of the previous month.

The GBPUSD was trading at 1.7158, up 0.04 percent. The pair faces initial support at 1.7108 and resistance at 1.7179.

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