The U.S. dollar bounced around Wednesday following economic reports including private payrolls, international trade and the Federal Reserve’s Beige Book.
February’s ADP employment report showed the private sector added 183,000, compared with 213,000 in the previous month, which briefly dragged the dollar into negative territory. The trade balance for December, delivered shortly after, showed that exports dropped 1.9% in December, while imports climbed 2.1%. The U.S. trade deficit widened 18.8% to $59.8 billion in December. The dollar popped higher following the report.
A somber Beige Book report found that most of Federal Reserve districts saw “slight-to-moderate” growth in late January and February. The partial government shutdown in January led to weaker activity in various Fed districts, according to the report.
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The ICE U.S. Dollar Index DXY, -0.04% was last little changed at 96.874.
The buck still defended some strength against many of its developed-market rivals, though notably not the Japanese yen USDJPY, -0.11% which was slightly stronger. One dollar last bought ¥111.80, down 0.1%.
The Australian dollar AUDUSD, -0.8045% meanwhile, was the worst performer in major currencies, sliding 0.8% to $0.7026, its lowest since early January.
“The Australian dollar was clearly hit by the below-consensus Q4 GDP report,” said Marshall Gittler, chief strategist at ACLS Global. For the fourth quarter, Australia recorded 2.3% gross domestic product growth on the year, less than the 2.8% expected. Quarter-on-quarter, GDP growth only amounted to 0.2%, versus 0.4% expected.
“The currency took another nosedive after two more banks changed their calls and forecast rate cuts this year,” Gittler added. “The market estimate of the likelihood of a cut this year jumped to 73% from 58% yesterday — a big change.”
Reserve Bank of Australia Gov. Philip Lowe repeated his previous statement that the chance of a rate cut or rate hike were balanced.
While a stronger yen and weaker Aussie dollar is often symptomatic of a risk-off trading day, the jury is out. U.S. stocks traded lower, on track to add on to a sluggish session on Tuesday for the Dow Jones Industrial DJIA, -0.52% and S&P 500 SPX, -0.65% . Global stocks were mixed on Wednesday.
In other currencies, the Canadian dollar USDCAD, +0.6067% slipped to a two month-low after the Bank of Canada left interest rates unchanged and said that uncertainty about the timing of future rate hikes had increased. On top of that, the BOC offered a bleak look at the Canadian and global economy, adding that a resolution of trade conflicts would be helpful.
One U.S. dollar rallied as high as C$1.3458 following the central bank update, and last bought C$1.3428, up from C$1.3351 late Tuesday.
The euro EURUSD, +0.0000% was last little changed at $1.1309, while the British pound GBPUSD, -0.0304% was down at $1.3171, versus $1.3177 late Tuesday.
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