Last Update: June 06, 2023, 04:00 AM IST
New York, United States (USA)
The dollar was up after better-than-expected jobs gains raised hopes that the Federal Reserve could continue raising rates as inflation remains high. (Reuters file photo)
The Institute for Supply Management (ISM) said its non-manufacturing PMI fell to 50.3 last month from 51.9 in April.
The dollar declined on Monday on news that the US services sector barely grew in May as new orders slowed, ending an early rally triggered by strong jobs growth.
The Institute for Supply Management (ISM) said its non-manufacturing PMI fell to 50.3 last month from 51.9 in April. A reading above 50 indicates growth in the service industry, which accounts for more than two-thirds of the economy.
Economists polled by Reuters had forecast the non-manufacturing PMI to rise to 52.2.
Bill Adams, chief economist at Comerica Bank, said in a note that the data indicates that a more accurate signal from the jobs report “may come from a rise in the unemployment rate rather than a solid increase in payroll employment.”
Friday’s data showed US job growth accelerated by 339,000 jobs in May, but unemployment rose to a seven-month high of 3.7%, suggesting an easing labor market.
The dollar was up after better-than-expected jobs gains raised hopes that the Federal Reserve could continue raising rates as inflation remains high.
“While job gains continued to surprise meaningfully to the upside, the labor market remains very strong,” said Brian Dingerfield, head of G10 FX strategy at NatWest Markets in Stamford, Connecticut.
The dollar index fell to 104.00, down 0.13% on the day after climbing as high as 104.40. This is just below the 11-week high of 104.70 reached on May 31.
The euro was up 0.07% at $1.0712, up from $1.0635 on May 31, its lowest since March 20.
The greenback fell 0.27% to 139.60 yen. It touched 140.93 on 30 May, the highest level since 23 November.
The US central bank is seen as most likely to leave rates unchanged in June, according to CME Group’s FedWatch tool, but Fed funds futures traders expect a rate hike of at least an additional 25 basis points by July 65% Are pricing in potential.
Fed officials, including vice chair nominee Philip Jefferson, have insisted that any decision to keep its benchmark overnight interest rate steady at the upcoming meeting should not be taken to mean that the US central bank has tightened monetary policy.
“You can think of quitting as part of a slowing down of the tightening cycle, rather than a pause in the tightening cycle,” Dingerfield said.
Fed officials are now in a blackout period ahead of the June 13-14 meeting. Consumer price inflation data for May, due on June 13, is the next major US economic release.
The Australian dollar edged higher ahead of the Reserve Bank of Australia’s (RBA) announcement on Tuesday’s interest rate decision.
Wells Fargo analysts Eric Nelson and Jack Boswell on Monday recommended buying the Australian currency against the US dollar and the British pound as the market underestimated the potential for rate hikes.
“Market pricing for RBA looks very undervalued both outright and relative to peers, in our view,” he added. And a sharp audio rally.”
(This story has not been edited by News18 staff and is published from a syndicated news agency feed – reuters,
