Investing.com – The dollar remained at a five-month highs against a basket of major currencies as data showing the private sector created more jobs than expected lifted sentiment ahead of the Federal Open Market Committee rate decision.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.16% to 92.43, a five-month high.
Private payrolls grew by 204,000 in April, a decline from the 228,000 private jobs created in March, according to a report released Wednesday by ADP and Moody's Analytics. That beat economists’ forecast of 200,000.
Some said the upbeat ADP data – which often serves as a precursor to nonfarm payrolls – did little to boost expectations for a bullish nonfarm payrolls report due Friday amid seasonal weakness in the labour market.
"We still expect a below-consensus payrolls reading of 145,000 in total, with private payrolls up 140,000. We are allowing for a late start to spring in parts of the country delaying some seasonal hiring," HFE said.
The upbeat data on the U.S. labour market arrived ahead of Federal Reserve’s interest rate decision at 2PM ET, widely expected to remain unchanged.
Analysts said they expected the Fed to stick to its ongoing narrative of “gradual” rate hikes, acknowledging that inflation was closing in on the central’s bank target.
Elsewhere, GBP/USD fell 0.05% to $1.3607 as traders welcomed upbeat UK construction data. Sentiment on sterling, however, remained fairly negative as expectations for a Bank of England rate hike later this month has faded.
EUR/USD fell 0.19% to $1.1970 despite better than expected manufacturing PMI data.
USD/JPY fell 0.01% to Y109.84, while USD/CAD fell 0.01% to C$1.2849.