The greenback edged higher against the majors in the Wednesday session, pushing the euro beneath the 1.44-level and the sterling below the 1.70-figure as US equities drifted into negative territory. The economic reports released earlier in the session were largely worst than expected, with July ADP private sector payrolls and non-manufacturing ISM falling short of consensus estimates.
The July ADP private sector payrolls posted a loss of 371k jobs, exceeding calls for 340k, albeit improving from 473k a month prior. The July non-manufacturing ISM unexpectedly deteriorated to 46.4, falling short of estimates for an improvement to 48.0 from a month earlier at 47.0. Meanwhile, the headline durable goods orders for June improved to -2.2% versus -2.5% from May and factory orders rose by 0.4%, off from 1.2% a month earlier. Thursday's data will see weekly jobless claims.
The key highlight will be Friday's July labor report. The consensus forecast is for the unemployment rate to creep closer to the 10% figure at 9.7% in July versus 9.5% from June. The non-farm payrolls figure is expected to improve sharply, posting a loss of 320k jobs compared with 467k jobs lost a month earlier.
Euro Buoyed above 1.44
The euro recovered above the 1.44-level against the greenback after drifting lower earlier in the session. Economic reports from the Eurozone released overnight included Germany services PMI and Eurozone June retail sales. The retail sales figure declined by 0.2% on a monthly basis in June, which missed expectations for an improvement of 0.2% and declining by 2.4% versus a drop of 3.3% in the previous year. Germany's July services PMI improved to 48.1 from 45.2, albeit less than the expected 48.4 improvement.
Traders will focus closely on the ECB monetary policy announcement in the early Thursday session. Although the ECB is seen leaving interest rates unchanged at 1.0%, the accompanying press conference from Bank President Trichet will be closely scrutinized for any clues on when the ECB will begin to rein in the quantitative easing.
EURUSD will find interim resistance at 1.4450, followed by 1.45 and 1.4530. Additional gains are eyed at 1.4565, backed by 1.46 and 1.4640. On the downside, support is seen at 1.44, backed by 1.4370 and 1.4340. Subsequent floors are eyed at 1.43, followed by 1.4250 and 1.42.