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US Dollar Slides on Weak US Jobs Report, Services PMI

December 4, 2019 at 18:27 by Andrew Moran

A fan of USD100 banknotesThe US dollar is falling against multiple currencies midweek amid disappointing private payroll numbers and a weak services sector. The bullish US-China developments appeared to have stopped the bleeding as investors have renewed their optimism (again) over an upcoming deal. But the buck may need to limit its losses if it wishes to keep its year-to-date gain.

According to payroll processor ADP, private sector employment growth slowed in November as the economy created 67,000 new jobs. This represents the smallest increase since May and falls short of market expectations of 156,000.

The report, which provides a hint as to how many jobs the US government will report a couple of days later, found that large- and medium-sized businesses created 27,000 and 29,000 positions, respectively. Smaller enterprises with fewer than 49 workers added 11,000 jobs. The service-providing sector led the industries with 85,000 jobs, but construction, manufacturing, and mining shed 18,000 positions.

Mark Zandi, chief economist of Moody’s Analytics, summarized the report:

The job market is losing its shine.

In other data, the Institute for Supply Management (ISM)’s non-manufacturing purchasing managers’ index (PMI) slumped from 54.7 in October to 54.7 last month. This was below the median estimate of 54.5. The drop was being attributed to slowing business activity, but there were gains in new non-manufacturing orders and prices.

The Mortgage Bankers Association (MBA) found that mortgage applications for the week ending November 29 tumbled 9.2%, down from the 1.5% gain in the previous week.

Looking ahead, trade data will be published on Thursday and non-farm payrolls will be released on Friday.

Equities mustered up a late-session rally as Bloomberg News reported that Beijing and Washington were making progress on finally agreeing to a phase-one trade agreement. The report suggests that a partial resolution could happen prior to the December 15 tariffs. This comes one day after President Donald Trump told reporters that there was no deadline and he would be fine with establishing a deal until after the 2020 election.

The US Dollar Index slid 0.09% to 97.65, from an opening of 97.71. The index, which measures the buck against a basket of currencies, is up more than 1.5% so far this year.

The USD/CAD currency pair plummeted 0.74% to 1.3197, from an opening of 1.3295, at 17:14 GMT on Friday. The EUR/USD dipped 0.06% to 1.1075, from an opening of 1.1084.

If you have any questions, comments, or opinions regarding the US Dollar, feel free to post them using the commentary form below.

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