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Dollar rallies vs yen after upbeat U.S. ISM services data: Oct 6, 2016

Market Review - 05/10/2016  22:10GMT  

Dollar rallies vs yen after upbeat U.S. ISM services data

The greenback initially rose against majority of its peers on Wednesday after the release of robust U.S. ISM Non-manufacturing PMI but pared its gains and retreated as investors awaited the release of U.S. jobs report on Friday. 

In a report, the Institute of Supply Management (ISM) said its non-manufacturing purchasing manager's index (PMI) rose to 57.1 last month from 51.4 in August. That was its highest level since October 2015 and its 80th consecutive month of growth. Analysts had expected the index to increase to 53.0. 

Versus the Japanese yen, the greenback traded sideways in Asia and gained to 103.01 in early European morning, then rose to session high at 103.17 in Europe. Later, dollar pared its gains and retreated to 102.86 at New York open on the release of soft U.S. ADP data. Dollar later climbed to a 3-week high of 103.66 in New York afternoon. 

The single currency traded with a firm bias in Asia and gained to 1.1229. Renewed buying at 1.1209 at European open lifted the pair and euro rose to session high at 1.1234 in European morning, however, price pared its gains and dropped to 1.1190 in New York morning after upbeat U.S. ISM services index before staging a minor rebound. 

The British pound remained under pressure in Asia and resumed its recent losing streak and tumbled to a fresh 31-year trough at 1.2686 at European open. However, pared its losses and staged a short-covering rebound to 1.2743 in European morning. 

In other news, BoE's Broadbent said 'I haven't made up my mind about policy action in November; unwise or risk to commit to specific policy path unconditionally; sees no reason to change outlook for medium-term investment; not true that BoE moved in Aug b4 having enough evidence; data of triggering art. 50 does not have direct impact on BoE policy; difficulty of weighing near-term data with long-term outlook will last for a while; near term question for Nov is whether economy looks like how we projected in Aug; in principle sterling cud fall fast enough to warrant a removal of monetary accomodation; we have no target for sterling, shud be seen in context of inflation; moves in sterling have been pretty orderly.' 

On the data front, U.S. private employers added 154,000 jobs in September, below economists' expectations, a report by a payrolls processor showed. Economists surveyed by Reuters had forecast the ADP National Employment Report would show a gain of 166,000 jobs.

Data to be released on Thursday: 

Australia trade balance, imports, exports, Germany factory orders, Swiss CPI, U.S. initial jobless claims and Canada building permits.

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