The U.S. dollar was higher against its key counterparts in the European session on Wednesday, as the U.S. treasury yields advanced after Senate Democrats voted to push through the Covid-19 rescue package without any Republican support.
The Senate voted 50-49 to begin the budget reconciliation process on Tuesday.
The move enables the Democrats to pass coronavirus relief legislation without any Republican votes.
The prospect for fiscal stimulus triggered a selloff in U.S. Treasuries, lifting the yields.
Investors cheered news that former European Central Bank chief Mario Draghi has been asked to form a technocratic government to solve the ongoing political crisis in Italy.
Prime Minister Giuseppe Conte resigned on January 26 after Italia Viva party withdrew its support from the coalition government.
Data from the payroll processor ADP showed that U.S. private sector employment increased much more than expected in January.
ADP said private sector employment jumped by 174,000 jobs in January after decreasing by a revised 78,000 jobs in December.
Economists had expected employment to rise by 49,000 jobs compared to the loss of 123,000 jobs originally reported for the previous month.
The currency held steady against its major rivals in the Asian session, with the exception of the pound.
The greenback rose to 0.9001 against the franc, its strongest since December 2. At yesterday’s trading close, the pair was quoted at 0.8972. The greenback may possibly challenge resistance around the 0.92 level.
The greenback climbed to more than a 2-month high of 1.2005 against the euro, compared to Tuesday’s closing value of 1.2043. The greenback is likely to test resistance around the 1.18 level.
Flash data from Eurostat showed that Eurozone consumer prices increased for the first time in six months in January.
The harmonized index of consumer prices climbed 0.9 percent year-on-year in January, reversing a 0.3 percent fall in December. Economists had forecast an annual growth of 0.5 percent.
The greenback reversed from an early low of 1.3683 against the pound, rising to 1.3619. The pound-greenback pair had ended yesterday’s trading session at 1.3667. The greenback is seen finding resistance around the 1.35 mark.
Final survey results from IHS Markit showed that the UK service sector contracted at the fastest pace in eight months in January due to the impact of restrictions related to the Covid-19 pandemic on trade and temporary business closures amid the third national lockdown.
The Markit/Chartered Institute of Procurement & Supply services Purchasing Managers’ Index plunged to 41.2 from 50.4 in December. A score below 50 indicates contraction. The flash score was 40.6.
The greenback bounced off to 1.2811 against the loonie and 0.7191 against the kiwi, from its prior 2-day low of 1.2763 and a 5-day low of 0.7226, respectively. The next possible resistance for the greenback is seen around 1.34 against the loonie and 0.70 against the kiwi.
In contrast, the greenback held steady against the aussie, after having retreated to 0.7624 earlier in the session. The greenback was worth 0.7607 per aussie at Tuesday’s New York session close.
The U.S. currency ticked up to 105.10 against the yen and held steady thereafter. The pair had closed Tuesday’s deals at 104.95.
The U.S. ISM non-manufacturing PMI for January will be released at 10:00 am ET.
The material has been provided by InstaForex Company – www.instaforex.com