Dollar losses have extended following the release of weak US private-sector labour data and growing market expectations that the Federal Reserve will have to cut its policy rate to shore up US growth and inflation.
The Dollar trade-weighted index, on the back foot yesterday after dovish comments by FOMC members and Chairperson Powell, today depreciated to its lowest point since 13th May after ADP data showed that the private non-farm sector had created only 27,000 jobs in May – the weakest number since October 2010 and well below the 204,000 average recorded in the previous 12 months. This does not bode well for the release of official non-farm payrolls data on Friday.
Most major currencies are up against the Dollar, with the GBP/USD cross up to 1.273 and EUR/USD threatening to breach 1.13 for the first time since mid-April. Nevertheless this has mostly been a Dollar weakness story, with Sterling showing little reaction to the release of a stronger-than-expected services PMI print in May of 51.0 and the Euro largely ignoring a small upward correction in the Eurozone composite PMI. Moreover, while the NZD/USD cross is up about 0.7%, gains in AUD/USD have seemingly been held back by the release of weaker-than-expected Australian GDP growth of 0.4% qoq in Q1. As a result, the AUD/NZD cross has continued to tumble to a level last seen in early April.
