WASHINGTON (dpa-AFX) - The U.S. dollar drifted lower Wednesday morning as expectations of an interest rate cut by the Federal Reserve rose after data showed a less than expected increase in U.S. private sector employment in June.
A report from the Institute for Supply showing a notable slowdown in the pace of service sector growth added to the optimism about a rate cut.
The ISM said its non-manufacturing index dropped to 55.1 in June from 56.9 in May, hitting its lowest level since a matching reading in July of 2017. Economists had expected the index to show a more modest decrease to 55.9.
The dollar's subdued display was also due to U.S. President Donald Trump's tweet that the country should match the 'currency manipulation game' indulged in by China and Europe.
Trump wrote on Twitter that China and Europe are playing big currency manipulation game and pumping money into their system in order to compete with USA.
'We should MATCH, or continue being the dummies who sit back and politely watch as other countries continue to play their games - as they have for many years!,' he added.
The dollar recovered lost ground subsequently and was moving slightly above the flat line later on in the session.
Against the euro, the dollar strengthened to 1.1270, recovering from a low of 1.1308 it touched around mid morning.
The pound sterling weakened to $1.276, losing about 0.14%, after having strengthened to $1.2601 earlier in the day.
The Japanese yen was up marginally at 107.85 a dollar, after moving between 107.53 and 107.92 a dollar.
The greenback shed 0.34% and 0.5%, against the loonie and the Aussie, with the respective pairs trading at 1.3062 and 0.7030.
Against Swiss franc, the dollar was up marginally at 0.9867.
In U.S. economic news, a report from payroll processor ADP showed private sector employment climbed by 102,000 jobs in June after rising by an upwardly revised 41,000 jobs in May. Expectations were for an increase of 140,000 jobs in the month.
Data released by the Labor Department said initial jobless claims in the U.S. dipped to 221,000, a decrease of 8,000 from the previous week's revised total of 229,000.
A report from the Institute for Supply Management said U.S. service sector growth slowed to a nearly two-year low in the month of June, with its non-manufacturing index dropping to 55.1.
According to a report from the Commerce Department, new orders for U.S. manufactured goods fell by a more than expected 0.7% in May, after plunging by a revised 1.2% in April.
Another report from the Commerce Department showed the U.S. trade deficit widened by more than anticipated in the month of May, as the value of imports jumped by much more than the value of exports.
The report said the trade deficit widened to $55.5 billion in May from a revised $51.2 billion in April.
Economists had expected the trade deficit to widen to $54.0 billion from the $50.8 billion originally reported for the previous month.
Copyright RTT News/dpa-AFX
© 2019 AFX News
