US Dollar Plummets Against Major Peers as Employment Data Misses Estimates
The US dollar plummeted against the euro and the British pound on Thursday, following a number of disappointing economic data that further confirmed a slowdown in the US economic growth. The greenback declined despite marginally stronger business activity in the United States, which failed to cancel the negative effect of today’s economic releases.
The ADP Research Institute published a fresh report on nonfarm employment at 12:15 GMT today, which showed that the private sector hired 158,000 employees in June. The number of created jobs last month was considerably lower than the 230,000 jobs created in the previous month and also came short of estimates of 185,000 new jobs.
The natural resources and mining sector shed 4,000 workers in June, while construction companies laid off 2,000 employees. On the other hand, the manufacturing sector added 6,000 jobs, which resulted in no job gain or loss in the goods producing sectors last month. Meanwhile, private firms hired 69,000 new employees for professional and business positions and 30,000 workers for transportation, trade, and utilities jobs, which marked the two biggest sector gains last month.
The report, which came a single day ahead of the official numbers, was based on the payroll data of about 400,000 US businesses. Employment reports from the ADP Research Institute are seen as early signals for government nonfarm payroll data, which is expected to reveal a gain of 179,000 jobs in June tomorrow.
The dollar further weakened today in the wake of a report from the Bureau of Economic Analysis on the US trade balance at 12:30 GMT. Goods and services trade deficit grew to $46.50 billion in May, which was a bigger deficit than expected. However, the trade gap between imports and exports was $1.1 billion smaller in May when compared to April.
Business activity remained resilient to worsening economic conditions, according to the latest reading for the nonmanufacturing purchasing managers’ index from the Institute for Supply Management. The index rose to 57.4 in June from 56.9 in May, despite forecasts of a 56.5 reading. The business activity subindex climbed 0.1 to 60.8, while the new orders subindex gained 2.8 to 60.5. Nonetheless, employment weakened last month, losing 2.0 to 55.8.
EUR/USD rose to 1.1406 as of 15:55 GMT on Thursday, the pair’s highest level since July 3, from 1.1339 when trading began today. GBP/USD climbed to 1.2964 after touching 1.2970 at 10:30 GMT, which was also the highest level since July 3. GBP/USD started the day at 1.2925.
The Dollar Index, which tracks the performance of the US currency against a basket of its major peers, was at 95.87 as of 16:02 GMT today from 96.29 yesterday.
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