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Dollar softens after ADP; euro hits one-month high

NEW YORK : The dollar fell against a basket of major currencies on Wednesday after a report on the U.S. labor market missed expectations by a wide margin, while the euro climbed to a one-month high on inflation worries.

The greenback fell after the ADP National Employment Report showed private payrolls rose by 374,000 in August, up from 326,000 in July but well short of the 613,000 forecast. A report on weekly initial jobless claims arrives on Thursday and on Friday the government releases the payrolls report for August, which could provide clues about the Federal Reserve's policy path.

"Certainly the recovery has been uneven but if nonfarm payrolls should also disappoint, that would seemingly close the door to an imminent taper and keep the dollar in a bit of a funk," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington DC.

The dollar has been under pressure since Friday, when Fed Chair Jerome Powell said at the Jackson Hole conference that while tapering could begin this year, the central bank was in no hurry to raise interest rates.

Concerns about rising COVID-19 cases denting the economic rebound could also serve to keep the central bank from scaling back stimulus.

Other data showed U.S. manufacturing activity increased more than anticipated in August, but a measure of employment in factories fell to a nine-month low, likely due to a shortage of workers.

The dollar index fell 0.203per cent and hit a new one-month low of 92.376.

The euro rose against the greenback to a one-month high as inflation worries persisted following data on Tuesday which showed euro zone inflation increased to 3per cent year-on-year in August, the highest in a decade and above the European Central Bank's 2per cent target, as well as the 2.7per cent Reuters forecast.

The euro was up 0.3per cent to US$1.1843, after rising to as much as 1.1857, its highest level since Aug. 5.

"We have seen numbers that argue against keeping policy so low for so long and that has been helping the euro... it is certainly going to heighten the focus on the QE debates next week when we hear from the ECB," said Manimbo.

German Bundesbank President Jens Weidmann said euro zone inflation risks overshooting ECB projections and the central bank should prepare for the end of its 1.85 trillion euro Pandemic Emergency Purchase Program (PEPP).

The ECB is scheduled to hold a policy meeting on Sept. 9.

The Japanese yen strengthened 0.04per cent versus the greenback at 109.97 per dollar, while sterling was last trading at US$1.3773, up 0.14per cent on the day.

In cryptocurrencies, Bitcoin last rose 2.9per cent to US$48,521.68 while Ethereum last rose 8.18per cent to US$3,713.24. Ether rose as high as US$3,791.28 on the day, its highest level since May 16.

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Currency bid prices at 3:18PM (1918 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index

92.4620 92.6620 -0.20per cent 2.757per cent +92.7900 +92.3760

Euro/Dollar

US$1.1844 US$1.1809 +0.30per cent -3.06per cent +US$1.1857 +US$1.1794

Dollar/Yen

109.9850 109.9950 +0.00per cent +6.45per cent +110.4150 +109.8800

Euro/Yen

130.25 129.88 +0.28per cent +2.62per cent +130.4400 +129.8900

Dollar/Swiss

0.9149 0.9153 -0.02per cent +3.44per cent +0.9189 +0.9140

Sterling/Dollar

US$1.3773 US$1.3756 +0.13per cent +0.82per cent +US$1.3797 +US$1.3732

Dollar/Canadian

1.2616 1.2614 +0.02per cent -0.93per cent +1.2637 +1.2581

Aussie/Dollar

US$0.7369 US$0.7314 +0.75per cent -4.21per cent +US$0.7384 +US$0.7308

Euro/Swiss

1.0837 1.0806 +0.29per cent +0.28per cent +1.0850 +1.0807

Euro/Sterling

0.8599 0.8582 +0.20per cent -3.78per cent +0.8602 +0.8574

NZ

Dollar/Dollar US$0.7067 US$0.7050 +0.23per cent -1.61per cent +US$0.7077 +US$0.7034

Dollar/Norway

8.6905 8.6915 -0.01per cent +1.21per cent +8.7100 +8.6690

Euro/Norway

10.2940 10.2636 +0.30per cent -1.65per cent +10.2996 +10.2460

Dollar/Sweden

8.6089 8.6237 +0.09per cent +5.03per cent +8.6465 +8.5927

Euro/Sweden

10.1959 10.1870 +0.09per cent +1.19per cent +10.2070 +10.1825

(Reporting by Chuck Mikolajczak; Editing by Mark Heinrich and David Gregorio)

Source: Reuters

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