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The U.S. dollar strengthened against its most major counterparts in the European session on Wednesday, as ADP private payroll employment grew more than forecast in October and investors awaited the Federal Reserve's decision to see whether it is edging closer to a possible rate hike next month.
Data from payroll processor ADP showed a bigger-than-expected increase in private sector employment in the month of October, following a notable slowdown in job growth in the previous month.
ADP said private sector employment climbed by 235,000 jobs in October after rising by a downwardly revised 110,000 jobs in September. Economists had expected an increase of about 200,000 jobs compared to the addition of 135,000 jobs originally reported for the previous month.
The Fed concludes its two-day meeting later in the day, with economists widely expecting it to keep benchmark interest rate unchanged in the 1 - 1.25 percent range. Investors focus on the Fed statement as to whether the bank is on track to raise rates in December as well as its interest rate path in 2018. Investors are also waiting for President Donald Trump's announcement regarding the selection of next Fed chair on Thursday. Trump is likely to choose Fed Governor Jerome Powell, who is viewed as dovish on interest rates, as the next head of the Federal Reserve. The U.S. nonfarm payrolls data on Friday may shed more light on the health of labor market. Economists expect the economy to have added 312,000 jobs in October and jobless rate to remain at 4.2 percent.
The currency has been higher against most major rivals in the Asian session, underpinned by a surge in U.S. consumer confidence to near a 17-year high in October.
The greenback added 0.5 percent to hit a 5-day high of 114.23 against the yen, compared to 113.62 hit late New York Tuesday. If the greenback-yen pair continues uptrend, 115.5 is seen as its next resistance level.
Survey data from IHS Markit showed that Japan's manufacturing activity continued to expand strongly in October, supported by solid expansions in output, new orders and employment.
The Nikkei Manufacturing Purchasing Managers' Index, or PMI dropped marginally to 52.8 in October from 52.9 in September. However, any reading above 50 indicates expansion in the sector.
The greenback strengthened to a 5-day high of 1.0021 against the franc, after falling to 0.9970 at 6:00 pm ET. The greenback is seen finding resistance around the 1.02 area.
The greenback spiked up to a 2-day high of 1.1614 against the euro, up by 0.4 percent from a low of 1.1657 hit at 4:00 am ET. Further upward trading may take the greenback to a resistance around the 1.13 mark.
The greenback recouped its early losses against the aussie and the loonie, trading at 0.7667 and 1.2902, up from its previous lows of 0.7688 and 1.2872,respectively. The next likely resistance levels for the greenback may be located around 0.74 against the aussie and 1.31 against the loonie.
Having fallen to an 8-day low of 0.6931 against the kiwi at 4:45 am ET, the greenback reversed direction and edged up to 0.6883. Next possible resistance for the greenback may be seen around the 0.67 area.
On the flip side, the greenback held steady against the pound with the pair trading at 1.3292. This follows a 3-week low of 1.3321 hit at 5:30 am ET, as the pound rose in the wake of data showing strong factory activity expansion in the U.K. The pair was worth 1.3282 at Tuesday's close.
Survey data from IHS Markit showed that the UK manufacturing sector activity expanded notably in October.
The IHS Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index rose to 56.3 in October from the revised 56.0 in September.
U.S. ISM manufacturing index for October and construction spending for September are set for release shortly.
At 1:15 pm ET, SNB Governing Board Member Fritz Zurbrugg will deliver a speech titled "Loans, Debt, and Growth" at the University of Bern.
At 2:00 pm ET, the Fed announces its decision on monetary policy. The central bank is widely expected to leave interest rates unchanged at 1 percent to 1.25 percent range.
The Bank of Canada Governor Stephen Poloz will testify along with Senior Deputy Governor Carolyn Wilkins before the Standing Senate Committee on Banking, Trade and Commerce, in Ottawa at 4:15 pm ET.
