The dollar index edged slightly lower on Thursday, correcting after reaching a five-month high as robust US economic data and a cautious Federal Reserve tone could continue to support the currency.
Treasury yields also retreated modestly after a jump yesterday, with the 10-year holding above 4.10% after touching a one-month peak in the prior session.
Data released Wednesday painted a resilient picture.
The ADP report showed private employers added 42,000 jobs in October, above forecasts and reversing September’s decline, while the ISM Services PMI climbed to 52.4, its strongest reading since February. Business activity and new orders surged, though the employment component remained in contraction at 48.2, suggesting persistent labour-market softness within the services sector.
Following the data, markets trimmed expectations for another rate cut this year, pricing a slightly lower probability of a 25-basis-point move in December and no change in rates in January. Several Fed officials are set to speak today, and a cautious tone could lend fresh support to both the dollar and yields.
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