The latest US ADP report registered an increase in private-sector employment of 235,000 for October following a revised 110,000 gain the previous month. The figure beat forecasts and represented the sharpest gain for five months with a significant rebound from hurricane-related losses and particular strength in the construction sector.
The US ISM manufacturing index in October declined 2.1pp to 58.7 from 60.8 in September, mostly in line with expectations. Much of October’s decline was driven by an easing of inventories and supplier deliveries indices.
As expected, there was no change in interest rates by the Fed last night. Risks to the economic outlook were again described as roughly balanced and there were expectations of solid growth over the medium term while the labour market continued to strengthen. The FOMC was monitoring inflation closely, but expected the rate to reach the 2% target over the medium term.
The Dollar initially edged lower following the statement and, after a limited recovery, there was fresh selling in Asian trading on Thursday as the Euro retested the 1.1660 area with the single currency still resilient.
The Greenback is seen on a steady recovery mode after the early trading session, triggered by a sharp drop in the US futures on reports of a temporary corporate tax cut proposed in the tax reform bill due to be unveiled later today. Attention remains on President Trump’s announcement of the next Fed Chief (likely to be Jerome Powell) and Republicans should introduce the tax bill in Congress.
In the US docket, jobless claims data is due along with Challenger job cuts and speeches by Federal Open Market Committee (FOMC’s) members, Jerome Powell, Raphael Bostic, and William Dudley.
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