The ADP data gives a poor indication for the labor sector
US service sector ISM survey highest since August 2023
BOC lowered interest rates by 25 basis points
The currency market traded briskly in the New York session yesterday with the focus on some important economic data being published.
The US dollar weakened at the start of the session when the ADP employment data report which measures the private sector in the United States (US) recorded a reading of 152,000 for May which was lower than the forecast of 173,000.
This could be an early indication of the NFP reading at the end of the week which is also likely to decline.
However, the US dollar managed to strengthen again when the US service sector ISM survey data followed.
The reading for May rose to 53.8 points above the forecast of 51.0, indicating a recovery in the services sector which recorded a contraction in the previous month.
The latest reading is also the highest figure recorded since August last year.
This situation is seen to add uncertainty in anticipation of interest rate cuts by the Federal Reserve (Fed).
Therefore, the next indication will be observed through the NFP employment report on Friday tomorrow before US inflation data will follow next week.
In addition, also stealing attention at yesterday's New York trading session was the result of the Bank of Canada (BOC) policy meeting which met expectations to lower interest rates by 24 basis points.
The BOC lowered the interest rate from 5.00% to 4.75% after maintaining it for 6 consecutive meetings.
This has sparked initial speculation in the market that there will be more rate cuts after this.
Today (Thursday), the European Central Bank (ECB) policy meeting will be observed with the expectation that interest rates will also be lowered by 25 basis points from the previous level of 4.50% to 4.25%.
