Forex - Greenback gains ground on safety flight

Investing.com - The U.S. dollar traded higher against its major counterparts Wednesday, as weak global economic data triggered a flight to the safety of the greenback.

During U.S. morning trade, the dollar was sharply higher against the euro, with EUR/USD dropping 0.66% to hit 1.3149.

In the U.S., payroll processing firm ADP reported the private sector added 119,000 jobs in April, far short of expectations for a gain of 177,000, after an increase of 209,000 in March. It was the smallest increase in ADP nonfarm payrolls since September 2011.

This report is viewed as a precursor to the official payroll data released Friday. The data added to fears that the economic recovery in the U.S. is losing momentum.

A separate report indicated that factory orders in the U.S. declined in line with expectations in March, falling 1.5%, following a 1.1% increase the previous month.

Meanwhile, fears over the economic outlook for the euro zone weighed on market sentiment after final euro zone manufacturing data for April slumped to a 34-month low, while the unemployment rate in the bloc climbed to a record 10.7% in March.

The greenback was also higher against the pound, with GBP/USD losing 0.15% to hit 1.6197.

The pound remained supported after reports earlier showed that construction sector activity in the U.K. declined less-than-expected in April, while U.K. mortgage approvals rose unexpectedly in March.

Elsewhere, the greenback edged higher against the yen but posted strong gains against the Swiss franc, with USD/JPY inching up 0.07% to hit 80.14 and USD/CHF climbing 0.67% to hit 0.9138.

The greenback was higher against its Canadian, Australian and New Zealand counterparts, with USD/CAD adding 0.37% to hit 0.9891,AUD/USD shedding 0.29% to hit 1.0302 and NZD/USD falling 0.66% to hit 0.8097.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, climbed 0.47% to hit 79.28.