Forex Today: US Dollar holds firm as focus shifts to ADP employment data

Here is what you need to know on Wednesday, August 2:

The US Dollar preserves its strength mid-week as market mood remains cautious. US stock index futures are down between 0.35% and 0.75% in the early European morning, while the US Dollar Index (DXY) clings to modest daily gains above 102.00. ADP will release private sector employment data for July to kickstart the American session.

ADP Jobs Preview: Will a softer report slow down the US Dollar?

The data from the US showed on Tuesday that the business activity in the manufacturing sector continued to contract in July and the number of job openings on the last business day of June declined to 9.58 million. Although DXY retreated from the multi-week high it touched above 102.40 after these data, it closed the day in positive territory. In the late American session, Global rating agency Fitch announced that it downgraded the US government's credit rating to AA+ from AAA, citing anticipated fiscal deterioration over the next three years and a high and growing general government debt burden. 

During the Asian trading hours, the Bank of Japan’s (BoJ) Minutes of the June monetary policy meeting showed that policymakers shared the view that there was no need to make operational tweaks to Yield Curve Control (YCC) at this point. Meanwhile, BoJ Deputy Governor Shinichi Uchida reiterated that it was important for the BoJ to patiently maintain easy policy. Following a three-day rally that saw the pair gain nearly 3%, USD/JPY came under renewed bearish pressure and was last seen losing 0.5% on the day at around 142.60. Despite the dovish BoJ tone, the Japanese Yen seems to be benefitting from risk aversion.

The data from New Zealand showed on Wednesday that the Unemployment Rate rose to 3.6% in the second quarter from 3.4% in the first quarter. In the same period, the Participation Rate increased to 72.4% from 72% and the Labor Cost Index rose 1.1% on a quarterly basis. NZD/USD extended its slide in the Asian session and was last seen trading at its lowest level in a month near 0.6100.

EUR/USD recovered above 1.1000 in the Asian session but retreated below that level at the beginning of the European session on Wednesday.

GBP/USD closed below 1.2800 for the first time in three weeks on Tuesday. The pair stays relatively quiet early Wednesday.

Pressured by rising US Treasury bond yields, Gold price turned south and dropped toward $1,940. As the 10-year US yield holds steady at around $1,940, XAU/USD consolidates its losses near $1,950.

Bitcoin staged a rebound following a drop below $28,500 but lost its bullish momentum after testing $30,000. Ethereum came within a touching distance of $1,800 on Tuesday but turned north in the second half of the day. ETH/USD, however, struggled to build on recovery gains early Wednesday and trades in negative territory near $1,850.