The dollar fell against the euro as a contraction in U.S. services
increased speculation that the Federal Reserve will cut the target
lending rate by a half- percentage point next month.
The greenback weakened as the Institute for Supply Management reported
that non-manufacturing industries shrank in October at the fastest pace
on record as a lack of credit and slowing sales caused companies to
retrench. The yen rose against the dollar as a drop in stocks
encouraged investors to sell higher-yielding assets and pay back
low-cost loans in Japan.
The ISM's non-manufacturing index, which covers almost 90 percent of
the U.S. economy, dropped last month to 44.4, the lowest level since
records began in 1997, the Tempe, Arizona- based group said today. A
reading of 50 is the dividing line between growth and contraction.
Companies in the U.S. cut an estimated 157,000 jobs in October, the
most in almost six years, a private report based on payroll data showed
today. The drop was larger than forecast and followed a revised 26,000
decrease in September that was bigger than previously estimated, ADP
Employer Services said.
Тotal U.S. payrolls fell by 200,000 last month, and the unemployment
rate rose to a five-year high of 6.3 percent, according to the median
forecast of economists. The Labor
Department's report is due Nov. 7.
Still we consider current dollar slide as temporary and expect appreciation of the greenback in the nearest future.
US data for Thursday starts at 1330GMT with the weekly jobless claims
and the preliminary Q3 non-farm productivity and unit labor costs data.
Jobless claims are expected to fall 4,000 to 475,000 in the November 1
week after holding steady in the previous week. Meanwhile, Non-farm
productivity is expected to rise only 0.4% in the preliminary third
quarter estimate as output growth likely fell in the quarter, but hours
worked also declined. Unit labor costs are expected to accelerate to a
3.0% annual rate from the 0.5% drop in the second quarter.