The dollar remained on the defensive versus a number of majors Wednesday, dropping to new multi-month lows against resource-linked currencies such as the loonie and aussie. The buck managed to fall no further versus the sterling, but weakened in afternoon trading to test a 4-month low set earlier in the week.
Its been a dreadful week versus the dollar, with traders shedding their security blanket in favor of equities and other riskier investments. Also, with energy and metal prices on the rise on hopes of a global economic rebound, the dollar has been battered by its commodities-related counterparts.
Traders largely shrugged off a prelude to Friday's pivotal jobs report Wednesday, and were also looking ahead to tomorrow's release of the results of the government's stress test on major banks.
The buck continued its dramatic 2-week plunge versus the loonie, dropping to a 6-month low of $1.1664. The buck has fallen almost nine cents since mid-April. Versus the aussie, the dollar fell to .7595, its lowest level since last October.
Meanwhile, the dollar failed to improve much against the sterling, hovering right around yesterday's 4-month low of 1.5164. With stocks rallying over the past two weeks and fears about the collapse of the UK banking system dissipating, the dollar has dropped more than 7 cents since April 21.
The dollar's recent performance against the euro has been less weak, but overall the dollar has been trending lower despite a lack of confidence in the European Central Bank's approach to the economic crisis. The dollar held its ground near 1.3300 on Wednesday, staying away from a monthly low of 1.3436, set earlier in the week.
Versus the yen, the dollar was unable to break above the elusive century mark, holding between 98 and 99 over the course of the day.
Private sector employment showed another notable decline in the month of April, according to a report released by Automatic Data Processing, Inc. (ADP) on Wednesday, although the decrease in jobs was much smaller than economists had expected.
The report showed that non-farm private employment fell by 491,000 jobs in April following a revised decrease of 708,000 jobs in March. Economists had expected a decrease of 645,000 jobs compared to the loss of 742,000 jobs originally reported for the previous month.
While the ADP report points to continued weakness in the labor market, it presents another sign that the economy is stabilizing and is likely to generate some optimism about the Labor Department's monthly employment report due to be released on Friday.
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