Major Currency Pairs Analysis: June 6, 2013

The euro rose against the dollar in choppy trading on Wednesday after a private-sector U.S. jobs report missed expectations. The weaker-than-expected data rekindled expectations for the Federal Reserve to keep stimulus programs in place, which weaken the dollar by design to spur recovery, especially in the labor market. Payroll processor ADP reported earlier that non-farm private payrolls rose by 135,000 in May, well below expectations for an increase of 165,000, which weakened the dollar. The previous month’s figure was revised down to a gain of 113,000 from a previously reported increase of 119,000. In a separate report, the Commerce Department said U.S. factory orders rose 1% in April, missing expectations for an increase of 1.6%. The euro, meanwhile, saw pressures of its own, after data revealed the eurozone's service-sector purchasing managers’ index fell to 47.2 in May, missing expectations for a 47.5 reading. The currency slid further when a separate report showed that eurozone retail sales fell 0.5% in April, more than expectations for a 0.1% decline.
EUR/USD" title="EUR/USD" width="624" height="468">
GBP/USD
Weaker-than-expected U.S. jobs data coupled with better-than-expected U.K. service-sector activity sent the pound strengthening against the greenback on Wednesday. The Markit U.K. service-sector purchasing managers’ index rose to 54.9 in May from 52.9 in April, outstripping expectations for a reading of 53.0. The data reinforced already growing expectations that the Bank of England will keep monetary policy unchanged at its monthly meeting on Thursday, especially in wake of better-than-expected U.K. manufacturing and construction data earlier in the week, which gave Cable support. The dollar, meanwhile, came under pressure after softer-than-expected jobs data hit the wire. On Thursday, all eyes will be on the Bank of England, which will announce its decision on benchmark interest rate.
GBP/USD" title="GBP/USD" width="624" height="468">
USD/JPY
The dollar extended losses against the yen on Wednesday after disappointing U.S. private sector employment data dampened expectations that the Federal Reserve will unwind its easing program. Payroll processor ADP said non-farm private employment rose by a seasonally adjusted 135,000 in May, well below expectations for an increase of 165,000. The previous month’s figure was revised down to a gain of 113,000 from a previously reported increase of 119,000. In a separate report, the Commerce Department said U.S. factory orders rose 1% in April, undershooting expectations for an increase of 1.6%. The yen was boosted earlier Wednesday after speech by Japanese Prime Minister Shinzo Abe on strategies to spur economic growth undershot market expectations. Prime Minister Abe outlined plans to achieve growth of 2% per year over the next decade through a series of economic reforms, but said legislative changes would not begin for some months.
USD/JPY" title="USD/JPY" width="624" height="468">
USD/CAD
The U.S. dollar was little changed against the Canadian dollar on Wednesday after data showed that the U.S. private sector added fewer-than-expected jobs in May, while Canadian building permits rose unexpectedly in April. Payroll processor ADP said non-farm private employment rose by a seasonally adjusted 135,000 in May, below expectations for an increase of 165,000. The previous month’s figure was revised down to a gain of 113,000 from a previously reported increase of 119,000. The data fuelled uncertainty over whether the Federal Reserve will scale back its asset purchase program this year. Meanwhile, Statistic Canada said the number of new building permits issued rose by a seasonally adjusted 10.5% to CAD7 billion in April, defying expectations for a 4% decline. March’s figure was revised to a 6% gain from a previously reported increase of 8.6%.