- Dollar index nudged off two-week highs
- Global bond yields fall on dovish central banks
- U.S. private-sector jobs data was lower than expected
- U.S. jobless claims fall, trade gap widens
- Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Adds new comment, U.S. services sector data, updates prices)
The dollar slipped to a one-week low against the Japanese yen on Wednesday, weighed down by declining U.S. Treasury bond yields, fading optimism over the China-U.S. trade deal, and the possibility of fresh tariff hostilities with Europe.
Volume was light ahead of the U.S. Independence Day holiday on Thursday. Investors, though, are looking to Friday's U.S. nonfarm payrolls for June, with markets forecasting new jobs of 160,000.
U.S. economic reports on Wednesday were mixed and did not really change the dollar's trading direction.
Data from payrolls processor ADP showed U.S. companies added 102,000 private-sector jobs in June, much higher than the revised 41,000 jobs in May, but lower than the 140,000 analysts had forecast.
Paul Ashworth, chief U.S. economist at Capital Economics, said the ADP report suggests the deterioration in the broader economy has spread to the labor market.
"Even with the U.S.-China trade talks back on track, for now at least, the evidence of a slowdown in employment growth should still be enough to persuade the Federal Reserve to cut rates in either July or September, but expectations of a 50 basis-point cut seem misplaced," he added.
Wednesday's data also showed U.S. weekly jobless claims fell more than expected to a seasonally adjusted 221,000, while the U.S. trade deficit in May widened to $55.5 billion from April's revised $51.2 billion.
Numbers on the U.S. service sector were also downbeat, with the Institute for Supply Management's non-manufacturing index falling to 55.1 in June from 56.9 in May.
In afternoon trading, the dollar dipped 0.1% against the yen to 107.82, after earlier falling to a one-week low of 107.54 JPY= .
The dollar-yen pair has become more sensitive to trade developments, with investors having grown more skeptical about the possibility of a speedy resolution to the trade war.
Against a basket of six currencies, the dollar eased from Tuesday's two-week highs .DXY to trade little changed on Wednesday at 96.765. The index earlier fell as bond yields extended the previous day's decline, with 10-year yields hitting 2-1/2-year lows below 1.94% US10YT=RR .
WEAK DOLLAR Expectations have grown that the Fed will embark on its first rate cut in a decade at a policy meeting this month. Markets are assigning a more than a 70% probability of a quarter point rate cut at the next policy meeting.
"We continue to like the broad U.S. dollar lower," said Mark McCormick, global head of FX strategy at TD Securities in Toronto. "It's telling of the anti-U.S. dollar view that the last month has seen the yen rally alongside higher-yield emerging market currencies."
The euro, meanwhile, was little changed at $1.1283 EUR= following a volatile session on Tuesday.
The common currency briefly got a lift on Tuesday after a media report that the European Central Bank was in no rush to cut rates at the July meeting. But it later slipped after IMF Managing Director Christine Lagarde, perceived as a policy dove, was nominated as the next ECB president.
======================================================== Currency bid prices at 1:18 PM (1718 GMT)Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR= $1.1281 $1.1283 -0.02% -1.64% +1.1310 +1.1269 Dollar/Yen JPY= 107.8200 107.8800 -0.06% -2.21% +107.9200 +107.5400 Euro/Yen EURJPY= 121.64 121.74 -0.08% -3.63% +121.8300 +121.3200 Dollar/Swiss CHF= 0.9864 0.9861 +0.03% +0.51% +0.9872 +0.9836 Sterling/Dollar GBP= 1.2571 1.2591 -0.16% -1.46% +1.2601 +1.2558 Dollar/Canadian CAD= 1.3067 1.3104 -0.28% -4.18% +1.3119 +1.3064 Australian/Doll AUD= 0.7036 0.6994 +0.60% -0.18% +0.7039 +0.6986 arEuro/Swiss EURCHF= 1.1128 1.1128 +0.00% -1.12% +1.1136 +1.1109 Euro/Sterling EURGBP= 0.8972 0.8959 +0.15% -0.13% +0.8990 +0.8960 NZ NZD= 0.6706 0.6671 +0.52% -0.16% +0.6719 +0.6671 Dollar/DollarDollar/Norway NOK= 8.5342 8.5646 -0.35% -1.21% +8.5949 +8.5322 Euro/Norway EURNOK= 9.6260 9.6668 -0.42% -2.83% +9.6901 +9.6254 Dollar/Sweden SEK= 9.3067 9.3278 -0.28% +3.83% +9.3636 +9.2882 Euro/Sweden EURSEK= 10.5011 10.5302 -0.28% +2.31% +10.5565 +10.4890 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ FX market positions http//tmsnrt.rs/2FPLRRN^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
