The dollar consolidated gains made after a solid ADP jobs report on Thursday which gave investors optimism that today’s non-farm payrolls number could also be upbeat. This would strengthen expectations for a rate hike by the Federal Reserve at its meeting this month.
The ADP private employment report was better than expected and increased by 253,000 jobs in May versus forecasts for a gain of 185,000 jobs. A separate report showed US factory activity picked up last month after slowing for two straight months. The ISM manufacturing PMI index rose to 54.9 in May from 54.8 in April.
The all-important US non-farm payrolls report is due later today and is anticipated to show that a total of 185,000 jobs were added to the economy in May. But aside from the headline figure, markets will be focusing on average earnings to look for signs of inflation, which is closely monitored by the Fed.
With risk appetite back in the markets, safe haven assets like the yen and gold suffered. US Treasury yields moved higher. The dollar touched a high of 111.70 yen, while the dollar index also rose. A broadly stronger dollar was negative for gold, which eased lower to $1258.89 an ounce, touching a one-week low.
In other currencies, the euro was steady against the dollar, trading around $1.1215, while sterling slipped to $1.2858. The aussie rebounded slightly to $0.7392 as iron ore prices ticked higher.
Meanwhile, the other main news of the day was President Donald Trump’s decision to withdraw the US from the Paris Climate Accord, which could result in a rise in oil production. Consequently, oil prices fell today. WTI slipped to $47.48 a barrel while Brent crude dropped to $49.73 a barrel.