The dollar is gaining ground against both the Euro and the pound sterling on Wednesday, following the release of the stronger than expected U.S. private sector employment data from ADP. However, the U.S. currency is nearly unchanged against the Japanese Yen.
The Labor Department is expected to release the U.S. jobs report for November on Friday. The report includes both private and public sector jobs. Investors are concerned that if Friday’s U.S. jobs data is strong, the Fed will likely begin tapering its stimulus measures at its December meeting.
Private sector employment in the U.S. rose at the fastest pace in a year in the month of November, according to a report released by payroll processor Automatic Data Processing, Inc. (ADP) on Wednesday. ADP said the private sector added 215,000 jobs in November following an upwardly revised increase of 184,000 jobs in October.
Economists had expected private sector employment to increase by about 170,000 jobs compared to the addition of 130,000 jobs originally reported for the previous month.
Reflecting a notable increase in the value of exports, the Commerce Department released a report on Wednesday showing that the U.S. trade deficit narrowed in the month of October. The report said the trade deficit narrowed to $40.6 billion in October from a revised $43.0 billion in September. Economist had expected the deficit to shrink to $40.2 billion from the $41.8 billion originally reported for the previous month.
While the Institute for Supply Management released a report on Wednesday showing continued growth in service sector activity in the month of November, the pace of growth unexpectedly slowed. The ISM said its non-manufacturing index fell to 53.9 in November from 55.4 in October, hitting its lowest level since June. Economists had expected the index to inch up to a reading of 55.5.
New home sales showed a substantial increase in the month of October, according to a report released by the Commerce Department on Wednesday, with the increase in sales more than offsetting the decrease seen in September.
The report said new home sales jumped 25.4 percent to a seasonally adjusted annual rate of 444,000 in October after sliding 6.6 percent to 354,000 in September. Economists had expected new home sales to come in at a rate of 425,000.
The dollar leaped to a high of $1.3527 against the Euro on Wednesday, but has since eased back to around $1.3560.
Retail sales in the euro area decreased for the second consecutive month in October, owing mainly to lower sales in the non-food sector, data released by statistical office Eurostat revealed Wednesday. Retail sales volume decreased 0.2 percent month-on-month in October, following a 0.6 percent fall in September. Economists had forecast sale to stay unchanged in October.
Eurozone’s economic growth moderated in the third quarter in line with the preliminary estimate, detailed data released by Eurostat confirmed Wednesday. The gross domestic product expanded 0.1 percent quarter-on-quarter in the third quarter after exiting the region’s longest-ever recession in the second quarter with a GDP growth of 0.3 percent.
Eurozone’s private sector economy expanded at a slightly faster rate than estimated earlier, final data released by Markit Economics revealed Wednesday. The seasonally adjusted purchasing managers’ index for the private sector economy dropped to 51.7 in November from 51.9 in October. However, the score was higher than the flash estimate of 51.5.
The German service sector expanded at a significantly faster pace in November, and the growth rate exceeded the preliminary estimates, final data from a survey conducted by Markit Economics and BME revealed Wednesday. The seasonally adjusted purchasing managers’ index for the service sector climbed to 55.7 in November from 52.9 in October, hitting a ten-month high. The revised score was above the earlier flash reading of 54.5.
French private sector business activity shrank more than initially estimated in November, final results of a survey by Markit Economics showed Wednesday. The headline composite output index, a gauge of business activity across the entire private sector including both services and manufacturing, fell to a five-month low of 48 in November from 50.5 in October. The flash reading was 48.5.
The greenback has rebounded from yesterday’s low of $1.6435 against the pound sterling, to around $1.6350 on Wednesday.
British service sector continued to expand solidly in November, a survey by Markit Economics and the Chartered Institute of Purchasing and Supply (CIPS) revealed Wednesday. The headline business activity index recorded a reading of 60 in November, suggesting strong growth in activity in historical terms. However, this was the weakest index level in five months and lower than October’s multi-year high of 62.5.
Overall shop prices in the United Kingdom declined in November by 0.3 percent, the British Retail consortium reported Wednesday. It marked the seventh straight month of annualized deflation for the U.K.
Bank of Japan Policy Board member Takehiro Sato has warned that additional monetary easing measures from the central bank is unlikely to raise people’s inflation expectations and can even prove counterproductive.
In April, the bank took all possible policy measures that would be available for the time being, Sato told business leaders in Hakodate. “Therefore, additional easing measures, if any, could be counterproductive in terms of shifting people’s expectation,” the policymaker added.
The buck has rebounded slightly from yesterday’s low of Y101.967 against the Japanese Yen on Wednesday, but has hovered around the Y102.500 level throughout the session.
Japan’s service sector growth eased in November from October’s record high, a survey by Markit Economics revealed Wednesday.
The headline seasonally adjusted business activity index fell to 51.8 in November from October’s record high reading of 55.3. The latest reading signaled moderate expansion in business activity at service providers.