Dollar selloff strengthens at the beginning of the American session after the report on ADP performance far lags behind expectations. A strong upward revision of the indicator for the previous month only worsens the picture, exaggerating the sharp slowdown in the labor market recovery. At the moment, the yen is following the dollar, which is the second-weakest than the New Zealand dollar. On the other hand, the Australian dollar is the strongest, followed by the Swiss franc and the euro.
The ADP report showed an increase in employment in the US private sector in July by only 167 thousand, which is well below expectations of 1,200. Nevertheless, the June figure was sharply revised from 2,369 to 4,314. By the size of the company, the small business added 63 thousand jobs, medium-sized businesses fell by 25 thousand, Big business grew by 129 thousand. Based on the sector, commodity companies added a total of 1 thousand jobs. Service providers added 166 thousand jobs.
“The labor market recovery slowed down in July,” said Ahu Yildirmaz, vice president and co-chairman of the ADP Research Institute. “We are seeing a slowdown in business growth across all sizes and sectors.”
The dollar’s selloff continued. The bad ADP poll, which showed that the private sector added just 167,000 new jobs in July, increased pressure on the US currency. The ISM Services PMI surprised positively, but investors ignored the headline as the employment sub-component was weak. Meanwhile, the US Congress continues to discuss the next aid package until an agreement is reached.
High-yielding euros, pounds, and Aussies flirted with recent multi-month highs amid dollar weakness, but there was no continuation, slightly modest easing ahead of Wall Street’s close.
Equities closed higher, while government bond yields bounced slightly from their recent lows, preventing USD/JPY from falling.
USD/CAD declined into a mix of encouraging Canadian data and rising oil prices, with WTI hitting $43.50 a barrel. The US EIA stocks report showed stocks fell 7.37 million in the week ending July 31.
Gold prices skyrocketed to new all-time highs. Spot gold is trading at $2,055.69 per troy ounce.
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