The data is expected to show that the US economy created over 600,000 jobs last month
The dollar index reversed yesterday’s pullback to 92.40 and advanced to the 92.80 area on Wednesday, re-shifts its attention to the key level at 93.00. Despite the bounce, the recovery potential looks limited at this stage, with downside risks persisting, albeit have abated somehow in recent trading. The prevailing risk-on tone in the global financial markets caps potential gains in the USD index.
Later today, the ADP report and ISM manufacturing for the month of August will come into market focus. The data is expected to show that the US economy created over 600,000 jobs last month. Investors are now beginning to shift focus to U.S. jobs data for August due on Friday. The release will give investors a chance to estimate when and how the Federal Reserve will begin tapering its bond purchases.
Fresh data out of the Eurozone showed that IHS Markit’s final manufacturing PMI fell to 61.4 in August from July’s 62.8, below an initial 61.5 flash estimate. The report capped bullish attempts in the euro during the European hours. EURUSD is holding marginally above the 1.1800 figure but still lacks upside momentum to see more sustained gains. The immediate upside barrier now arrives around 1.1850, followed by the 1.1900 figure. On the downside, the nearest support is expected at 1.1780, followed by the 20-DMA which lies in the 1.1755 area.
In a wider picture, the dollar will continue to follow fresh signals from the Federal Reserve. In this context, FOMC’s September meeting will be in focus. Ahead of this event, the central bank officials could deliver some hawkish hints if the upcoming economic reports surprise on the upside. In this scenario, the greenback would rise across the board due to the monetary policy divergence.