The US dollar rose against the euro on Thursday following a new report on the conditions of the US labor market, which revealed numbers that beat estimates. The greenback was further supported by data showing strong industrial activity in May as new orders and employment increased.
The ADP Research Institute published a report at 12:15 GMT today that said that the US private sector hired 253,000 new employees in May from 174,000 in April. The data far exceeded expectations of 185,000 new workers, which improved the outlook of the US economy.
Most of the gain was in medium companies, which created 113,000 new jobs last month, followed by small firms that collectively hired 83,000 more employees. The US private sector added 88,000 new professional and business jobs and employed 58,000 workers for the transportation and utilities sectors.
The ADP data is an indicator for the official employment numbers and may convince members of the Federal Open Market Committee to tighten their monetary policy when they meet on June 13. The CME Group FedWatch tool, which tracks federal funds futures to calculate the probability of changing interest rates, showed 91.2% chance of a 0.25% hike in interest rates. Higher interest rates often support the dollar.
Manufacturing activity data from the Institute for Supply Management further supported the greenback today. The instituteâs purchasing managersâ index rose to 54.9 in May from 54.8 in April, despite expectations of a drop to 54.5. The increase was partially due to improved employment in the manufacturing sector and a higher number of new orders.
EUR/USD traded at 1.1218 as of 10:55 GMT on Thursday from 1.1206 at 16:45 GMT, the pairâs lowest level since yesterday. EUR/USD began trading today at 1.1237.
The Dollar Index, which tracks the performance of the US currency against a basket of its main counterparts, rose to 97.20 as of 10:45 GMT from 96.92 yesterday.
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