FX Roundup: Dollar continues uptick despite mixed data

The dollar posted upticks against major currency crosses in European trading on Wednesday, extending overnight gains despite mixed US economic data.

The US private sector generated slightly more jobs than expected last month, according to private consultancy ADP. Employers added 182,000 jobs in October compared with a downwardly revised 190,000 reading in the previous month and with analysts’ expectations for a 180,000 reading.

“For Friday’s official employment report from the Labor Department, we expect nonfarm payroll growth of 175k and a one-tenth decline in the unemployment rate, to 5.0%,” analysts at Barclays said in a note.

Elsewhere, the Institute for Supply Management's (ISM) non-manufacturing index, which surveys the sector's purchasing and supply executives, climbed to 59.1 last month from 56.9 and compared with analysts’ expectations for a 56.5 reading.

The US monthly trade deficit narrowed sharply to $40.8bn in September, down from the revised estimate of $48.0bn in August and compared with analysts’ forecast of $41bn.

Meanwhile, the Mortgage Bankers Association said its seasonally adjusted index of application activity, which covers home purchase demand and refinancing demand, declined 0.8% in the week ended 30 October.

At 1636 GMT, the dollar was up 0.40% against the yen exchanging at JPY121.55. In tandem, the pound and euro fell 0.30% and 0.92% to exchange at $1.5374 and $1.0863 respectively. Completing a clean sweep of major crosses, the greenback also rose 0.24% against the Swiss franc exchanging at CHF0.9933.

Meanwhile, the Australian dollar fell 0.60% to change hands against its American counterpart at US$0.7143, as the Reserve Bank of Australia’s decision, to leave interest rates on hold, lost fizz.

The New Zealand dollar continued lower still, down 1.26% against the greenback, to change hands at $0.6580. Other commodities linked currencies also traded lower, with the dollar up 1.53% and 0.80% against Norwegian Krone and Canadian dollar to change hands NOK8.6360 and CAD$1.365 respectively.

Kit Juckes, head of forex at Societe Generale, said, “Equity indices, bond yields and Asian currencies are higher as we head into the business end of the week's global news and data calendar. Better services PMIs in China (Caixin up to 52 from 50.5), Japan (52.2 vs 51.4 ) and India (53.2 vs 51.3) all helped the mood. How that adds to speculation of a December Fed rate hike will be fascinating.”

“NZD remains our favourite Asian FX short. Yesterday's milk auction saw prices fall and overnight Q3 employment data came in at -0.4% q/q. Long AUD/NZD has had a poor run last month, but is looking less awful now. Australia's third quarter GDP growth is set to pick up on the back of decent retail sales and better trade data. Exports rose 3% in September, and retail sales 0.4%.”

Finally, in the Americas, the dollar traded higher against the Brazilian real (up 0.79%), Chilean peso (up 0.38%), Mexican peso (up 0.67%) and Colombian peso (up 1.25%).