Dollar rises broadly for second day after upbeat U.S. data: May 5, 2016

Market Review - 04/05/2016  22:08GMT 

Dollar rises broadly for second day after upbeat U.S. data

The greenback remained broadly higher against the other major currencies on Wednesday, as release of positive U.S. data boosted optimism over the strength of the economy. 

Versus the Japanese yen, although dollar ratcheted lower after a brief spike to 107.47 in Australian morning and fell to 106.25 shortly after New York open due to downbeat ADP employment data, renewed buying emerged there and later pushed price to 107.19 following the release of upbeat ISM Non-Manufacturing PMI n U.S's Factory Orders. 

On Wednesday, payroll processing firm ADP said non-farm private employment rose by 156,000 last month, missing expectations for an increase of 196,000. The economy created 194,000 jobs in March, whose figure was downwardly revised from a previously reported increase of 200,000. Later, in New York morning, The Institute for Supply Management said on Wed that its index of non-manufacturing activity for U.S. rose to 55.7 in Apr from 54.5 the month before. Meanwhile, data from the Commerce Department showed U.S.'s factory orders rose 1.1% in March, rebounding from a 1.9% drop in February. 

Elsewhere, data showed that the U.S. trade deficit narrowed to $40.44 billion in March from $46.96 billion in February, whose figure was revised from a previously estimated deficit of $47.10 billion. 

The single currency traded in a choppy fashion on Wednesday. Despite a brief rise to 1.1512 in European morning and then falling marginally below Asian low at 1.1477 to 1.1470, price rebounded to 1.1530 at New York open after downbeat ADP employment data but only to fall to a fresh session low at 1.1470 before movgin sideways. 

Earlier, Markit said its euro zone services PMI slipped to 53.1 in April from 53.2 the previous month, confounding expectations for an unchanged reading. 

The British pound's rebound from Asian low at 1.4520 to session high at 1.4572, however, price tumbled to 1.4460 in Europe on poor UK construction PMI. Later, cable recovered to 1.4543 at New York open before falling again. 

In a report, market research firm Markit and the Chartered Institute of Purchasing & Supply said that their U.K. construction purchasing managers' index fell to a seasonally adjusted 52.0 last month from March’s reading of 54.2. That was its slowest pace since June 2013. 

In other news, Atlanta Federal Reserve President Dennis Lockhart said on Wednesday, 'Puerto Rico debt crisis unlikely to spill over into the rest of the U.S. economy; there is a disconnect between anecdotal evidence from local business leaders and GDP data; the Fed is not getting behind the curve on inflation, has options on when to raise rates; incoming economic data will be major aspect of his decision-making on raising rates; no risk at moment that the economy is overheating; wonders if political uncertainty is affecting business investment or consumer activity.' 

Data to be released on Thursday: 

Australia retail sales, imports, exports, trade balance, China Caixin service PMI, U.K. Markit service PMI, U.S. initial jobless claims and Canada building permits.