U.S. dollar recovers after disappointing private employment report

Dollar recovers then shows appeal after weak private employment report Yen shows appeal as safer haven Kiwi continues to climb New York City, Aug 4 : The dollar recovered from a fall on Wednesday brought about by the release of an unexpectedly weak private employment report knocking down U.S. Treasury yields and may or may not have foreshadowed softness in jobs data due on Friday from the American government. In the next two days, the Dollar index against major currency currencies fell as much as 0.2% on the report before turning back up. He was down less than 0.1% on the day at 10: 08 a.m. EDT (no sign of difference). The Japanese yen, often seen as a competing safe haven, was a big beneficiary with the dollar dropping to 108.77. The euro and British pound gained against the greenback. The euro was last trading at $1.1859, down less than 0.1% of the day on August 31, 2018. Sterling rose 0.1% to $1.3930. The swings show how uneasy the currency markets are ahead of the next big catalyst that may show whether economies will grow so quickly that they fuel inflation or slow due to the continuing coronavirus pandemic. The initial downdraft came when the ADP National Employment Report showed U.S. private payrolls increased nearly half as much as economists had expected, likely constrained by shortage of workers and raw materials. It was a fairly big disappointment, said Mazen Issa, senior currency strategist of TD Securities. The ADP report has a poor record of prediction of the government report, Issa said, but added that the miss is substantial enough that the markets could be a little bit more nervous going into Friday's report. Federal Reserve Chair Jerome Powell and other policy makers have recently emphasized that upcoming employment reports will be critical to the board's decisions about when and how to reduce support for the economy. The ADP report does not capture changes in government employment. The yield on the 15 year U.S. Treasury initially fell sharply and the 10-year yield went to its lowest level since February. These moves came after the ADP report and news that the government is considering plans to reduce its debt issuance. Questions about the supply of Treasuries have been affecting yields and having spillover influence on the dollar. The dollar has lost value as declining yields have made strategists question whether the U.S. economy will grow as much as they had expected in light of the spread of the highly contagious Delta variant of COVID - 19. Before the ADP report, the Euro had fallen flat against the dollar, giving up initial gains on data that showed Euro zone business activity surged in July, expanding at its fastest pace in 15 years. The New Zealand dollar made strong gains for the second consecutive day, after a fall in unemployment in the country raised expectations that rate hikes would begin within weeks. The kiwi was last with 0.6% recovery against the dollar at $0.7061. The country's central bank had indicated on Tuesday that it would begin consulting on ways to tighten mortgage lending standards as it tries to control an inflated housing market.