Dollar gains on upbeat U.S. private-sector jobs report

Written By Unknown on Kamis, 09 Januari 2014 | 08.10

Investing.com - The greenback moved higher against most major currencies on Wednesday after industry data revealed more hiring took place in the U.S. private sector last December than anticipated.

U.S. trading on Wednesday, EUR/USD was down 0.26% at 1.3581.

The dollar firmed after payroll processor ADP reported that private-sector nonfarm payrolls rose by 238,000 in December, surpassing consensus forecasts for an increase of 200,000. November's figure was revised up to a gain of 229,000 from a previously reported increase of 215,000.

The numbers fueled hopes that the official December jobs report due out on Friday will meet or beat expectations as well.

The Federal Reserve has said it will pay close attention to indicators when deciding the fate of its USD75 billion monthly bond-buying program, and Wednesday's data fueled expectations for the U.S. central bank to scale down purchases even further this year.

Fed bond purchases aim to prop up the economy by suppressing long-term borrowing costs, weakening the dollar as a side effect as long as they remain in effect.

Elsewhere on Wednesday, the Federal Reserve released the minutes of its December policy meeting that revealed most monetary authorities felt January was the right time to trim its monthly bond-buying program to USD75 billion from USD85 billion, which also gave the greenback some support.

"Many members judged that the Committee should proceed cautiously in taking its first action to reduce the pace of asset purchases and should indicate that further reductions would be undertaken in measured steps," the minutes read.

"Members also stressed the need to underscore that the pace of asset purchases was not on a preset course and would remain contingent on the Committee's outlook for the labor market and inflation as well as its assessment of the efficacy and costs of purchases."

U.S. news overshadowed upbeat indicators out of Europe.

Data released earlier revealed that the euro zone's unemployment rate remained unchanged at 12.1% in November, in line with expectations, while euro zone retail sales posted solid gains in November.

Retail sales rose 1.4% in November, the biggest rise since November 2001 according to Eurostat, the European Union's statistical arm, recovering from a 0.4% fall in October and well above analysts' forecasts for a 0.2% gain.

A separate report showed that German factory orders surged 2.1% in November, surpassing expectations for a gain of 1.5%.

The greenback was down against the pound, with GBP/USD up 0.33% at 1.6455.

In the U.K., data earlier showed that house prices fell for the first time in 11 months in December.

Mortgage lender Halifax said house prices fell by 0.6% last month compared to expectations for a 0.6% increase. However, prices were still up by 1.9% in the last three months 2013, compared to the third quarter.

Still, the pound traded higher on broader sentiment that the U.K. economy has demonstrated enough improvement in the recent past that monetary policy shifts may loom on the horizon.

The dollar was up against the yen, with USD/JPY up 0.14% at 104.74, and up against the Swiss franc, with USD/CHF up 0.14% at 0.9104.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.35% at 1.0804, AUD/USD down 0.16% at 0.8912 and NZD/USD trading down 0.21% at 0.8266.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.19% at 81.16.

On Thursday in the U.S., the Labor Department is to release its weekly report on initial jobless claims.

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