The dollar is down sharply against all of its major rivals Wednesday afternoon, extending losses since the start of the week. Economic data was mixed this morning. Private sector employment came in better than expected, ahead of the employment report at the end of the week. However, the ISM non-manufacturing index fell short of expectations. Comments from a prominent Fed official also weighed on investor sentiment.
Federal Reserve Bank of New York President William Dudley warned that the deteriorating outlook about the global growth and the dollar strength would hurt the U.S. economy.
In an interview, Dudley stated that the Fed would consider persistent tightening of financial conditions very seriously while pursuing its planned interest rate hikes.
Private sector employment in the U.S. increased by more than expected in the month of January, according to a report released by payroll processor ADP on Wednesday. ADP said private sector employment jumped by 205,000 jobs in January following an upwardly revised increase of 267,000 jobs in December.
Economists had expected employment to climb by about 190,000 jobs compared to the addition of 257,000 jobs originally reported for the previous month.
Growth in the U.S. service sector slowed in the month of January, the Institute for Supply Management revealed in a report released on Wednesday. The ISM said its non-manufacturing index dropped to 53.5 in January from an upwardly revised 55.8 in December, although a reading above 50 still indicates growth in the service sector.
Economists had expected the index to inch up to 55.5 from the 55.3 originally reported for the previous month.
Bank of Japan Governor Haruhiko Kuroda said there is no limit to measures for monetary policy easing and it is open to expand asset purchases further, if necessary.
“If we judge that existing measures in the toolkit are not enough to achieve the goal, what we have to do is to devise new tools, rather than give up the goal,” Kuroda said in a speech in Tokyo.
The greenback has dropped to a week and a half low of Y117.462 against the Japanese Yen Wednesday afternoon, from a high of around Y121.500 last Friday.
The services sector in Japan expanded in January, and at an accelerated pace, the latest survey from Nikkei revealed on Wednesday with a PMI score of 52.4. That’s up from 51.5 in December, and it moves further above the boom-or-bust line of 50 that separates expansion from contraction.
Japan’s consumer confidence weakened as expected at the start of the year, though slightly, survey data from the Cabinet Office showed Wednesday. The seasonally adjusted consumer confidence index dropped to 42.5 in January, in line with expectations, from 42.7 in December.
The dollar has fallen to a 3-month low of $1.1110 against the Euro Wednesday, from around $1.08 at the start of the trading week.
Eurozone retail sales grew in December for the first time in four months, led by increased spending on food and drinks during the holiday season. Retail sales rose a calendar-and-seasonally adjusted 0.3 percent in December, data from Eurostat showed, in line with economists’ expectations. The 0.3 percent fall reported earlier for November was revised to zero.
The eurozone private sector expanded at the slowest pace in four months in January, final survey data from Markit showed Wednesday. The composite output index fell to 53.6 in January from 54.3 in December. The reading was slightly above the flash score of 53.5.
The buck has dropped to over a 3-month low of $1.4615 against the pound sterling this afternoon, from around $1.42 last week Friday.
The U.K. service sector logged a further solid rate of expansion at the start of the year, underpinned by stronger inflows of new orders, survey figures from Markit Economics showed Wednesday. The Chartered Institute of Procurement & Supply/Markit services Purchasing Managers’ Index rose marginally to 55.6 in January from 55.5 in December. Meanwhile, it was forecast to fall to 55.4.
Shop prices in the United Kingdom were down 1.8 percent on year in January, the British Retail Consortium said on Wednesday. That follows the 2.0 percent decline in December.
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