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Dollar softens after ADP; euro hits one-month high

EconomySep 01, 2021 03:46PM ET
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2/2 © Reuters. FILE PHOTO: A U.S. dollar banknote is seen in this illustration taken May 26, 2020. REUTERS/Dado Ruvic/Illustration/File Photo 2/2

By Chuck Mikolajczak

NEW YORK (Reuters) - The dollar fell against a basket of major currencies on Wednesday after a report on the U.S. labor market missed expectations by a wide margin, while the euro climbed to a one-month high on inflation worries.

The greenback fell after the ADP National Employment Report showed private payrolls rose by 374,000 in August, up from 326,000 in July but well short of the 613,000 forecast. A report on weekly initial jobless claims arrives on Thursday and on Friday the government releases the payrolls report for August, which could provide clues about the Federal Reserve's policy path.

"Certainly the recovery has been uneven but if nonfarm payrolls should also disappoint, that would seemingly close the door to an imminent taper and keep the dollar in a bit of a funk," said Joe Manimbo, senior market analyst at Western Union (NYSE:WU) Business Solutions in Washington DC.

The dollar has been under pressure since Friday, when Fed Chair Jerome Powell said at the Jackson Hole conference that while tapering could begin this year, the central bank was in no hurry to raise interest rates.

Concerns about rising COVID-19 cases denting the economic rebound could also serve to keep the central bank from scaling back stimulus.

Other data showed U.S. manufacturing activity increased more than anticipated in August, but a measure of employment in factories fell to a nine-month low, likely due to a shortage of workers.

The dollar index fell 0.203% and hit a new one-month low of 92.376.

The euro rose against the greenback to a one-month high as inflation worries persisted following data on Tuesday which showed euro zone inflation increased to 3% year-on-year in August, the highest in a decade and above the European Central Bank's 2% target, as well as the 2.7% Reuters forecast.

The euro was up 0.3% to $1.1843, after rising to as much as 1.1857, its highest level since Aug. 5.

"We have seen numbers that argue against keeping policy so low for so long and that has been helping the euro... it is certainly going to heighten the focus on the QE debates next week when we hear from the ECB," said Manimbo.

German Bundesbank President Jens Weidmann said euro zone inflation risks overshooting ECB projections and the central bank should prepare for the end of its 1.85 trillion euro Pandemic Emergency Purchase Program (PEPP).

The ECB is scheduled to hold a policy meeting on Sept. 9.

The Japanese yen strengthened 0.04% versus the greenback at 109.97 per dollar, while sterling was last trading at $1.3773, up 0.14% on the day.

In cryptocurrencies, Bitcoin last rose 2.9% to $48,521.68 while Ethereum last rose 8.18% to $3,713.24. Ether rose as high as $3,791.28 on the day, its highest level since May 16.

========================================================

Currency bid prices at 3:18PM (1918 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index

92.4620 92.6620 -0.20% 2.757% +92.7900 +92.3760

Euro/Dollar

$1.1844 $1.1809 +0.30% -3.06% +$1.1857 +$1.1794

Dollar/Yen

109.9850 109.9950 +0.00% +6.45% +110.4150 +109.8800

Euro/Yen

130.25 129.88 +0.28% +2.62% +130.4400 +129.8900

Dollar/Swiss

0.9149 0.9153 -0.02% +3.44% +0.9189 +0.9140

Sterling/Dollar

$1.3773 $1.3756 +0.13% +0.82% +$1.3797 +$1.3732

Dollar/Canadian

1.2616 1.2614 +0.02% -0.93% +1.2637 +1.2581

Aussie/Dollar

$0.7369 $0.7314 +0.75% -4.21% +$0.7384 +$0.7308

Euro/Swiss

1.0837 1.0806 +0.29% +0.28% +1.0850 +1.0807

Euro/Sterling

0.8599 0.8582 +0.20% -3.78% +0.8602 +0.8574

NZ

Dollar/Dollar $0.7067 $0.7050 +0.23% -1.61% +$0.7077 +$0.7034

Dollar/Norway

8.6905 8.6915 -0.01% +1.21% +8.7100 +8.6690

Euro/Norway

10.2940 10.2636 +0.30% -1.65% +10.2996 +10.2460

Dollar/Sweden

8.6089 8.6237 +0.09% +5.03% +8.6465 +8.5927

Euro/Sweden

10.1959 10.1870 +0.09% +1.19% +10.2070 +10.1825

Dollar softens after ADP; euro hits one-month high
 

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Comments (6)
Todd Gray
Todd Gray Sep 01, 2021 4:11PM ET
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were heading the way Japan went. eventually that leads to deflation.
Todd Gray
Todd Gray Sep 01, 2021 3:36PM ET
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in the last year, the FED has injected more capital into the system than the entire corresponding US GDP. if they could add 12 million jobs next month, the dollars still overvalued.
Joel Schwartz
Joel Schwartz Sep 01, 2021 2:34AM ET
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Central banks destroyed capitalism and the free markets. Look at their balance sheets. It’s just blatant.
DONGHUN LEE
DONGHUN LEE Sep 01, 2021 2:01AM ET
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Insane JP. But Since all countries have released money, I think the dollar will eventually rise compared to developing countury currency. The problem is, based on what the FED is doing, I think it's going to be Stagflation. There's no answer then.
ron king
ron king Sep 01, 2021 1:52AM ET
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stop spreading fear. The dollar is pinned? what the ********does that even mean? Stop causing fear in the markest!
Todd Gray
Todd Gray Sep 01, 2021 12:09AM ET
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This is a lie. Since March of last year, the FED has injected 27 trillion dollars into the US economy (thats more than an entire years US GDP), causing permanent massive inflation they're pretending isn't real. You could have 100% employment tomorrow, and that would increase GDP maybe a percent or two. Adding one or two percent to the GDP does not mean much of anything compared to 27 trillion new dollars of liquidity.
 
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