Investing.com - The euro extended gains against the dollar on Wednesday after reports showing that U.S. manufacturing activity slowed last month while the U.S. private sector added fewer-than-expected jobs tempered expectations for higher interest rates.
The Institute for Supply Management said its index of purchasing managers fell to a 14-month low of 51.5 in March from February’s 52.9. Economist had expected the index to tick down to 52.5
The employment sub-index declined to 50.0 from 51.4 in February, while the new orders sub index also fell.
At the same time, another report showed that U.S. construction spending fell unexpectedly in February while the previous month’s figure was revised to show a steeper decline than previously estimated.
EUR/USD was at 1.0760, up from around 1.0744 ahead of the reports.
The reports came on the heels of the latest ADP nonfarm payrolls report, which showed that the U.S. private sector added 189,000 jobs last month, below economists' expectations for jobs growth of 225,000 and the lowest since January 2014.
While not viewed as a reliable guide for the government jobs report due on Friday it does give guidance on private-sector hiring. Investors were looking to Friday’s employment report for further clarity on the path of U.S. monetary policy.
The euro remained supported after data earlier in the day showed that manufacturing activity across the euro zone grew at the fastest rate in 10 months in March, indicating that the recovery in the region is continuing to gain traction.
The Markit euro zone manufacturing PMI rose to a 10-month high of 52.2, higher than the preliminary reading of 51.9.
Uncertainty over Greece capped the euro’s gains as a deadlock over the Greek government’s reform plans continued. Athens will run out of cash later this month unless it can reach a compromise with its creditors on a program of economic reforms in time to unlock more bailout funds.
Elsewhere, the dollar fell to session lows against the yen, with USD/JPY down 0.54% to119.48.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, slid to 98.33.