The U.S. dollar was marginally softer against most major currencies on Wednesday but closed the day off its worst overnight levels thanks to a bullish ISM, another positive day in equities and higher Treasury yields. The ISM non-manufacturing index set a 12-year high of 59.8, offsetting weakness in the ADP private payroll report and a decline in the corresponding purchasing manager’s index.
USD/JPY was under pressure as the Asian session kicked off by media reports claiming Fed governor Jerome Powell is President Donald Trump’s top pick for Fed Chair. Powell, seen as Yellen’s ideological twin, would likely retain the dovish bias of the Fed, maintaining a very cautious approach to monetary policy. As a result, the dollar slid off 112.87 to 112.50 support during the Asian session and bottomed out at 112.30 before beginning its rebound during the U.S. session to just shy of 113.00.
The euro continued to be weighed by divisive events in Spain as well as soft EU retail sales data, staying below 1.180 against the dollar for a third straight day. Further downside pressure in the euro was protected by the 50- and 100-hour moving averages, keeping EUR/USD wedged in between 1.1750 and 1.1765 for the U.S. session, closing out the day with a small gain at 1.1763.
The other dollar pairs were also trading in relatively narrow ranges. Cable perked up on the UK services sector PMI (53.6 from 53.2 previously) but stayed clear of 1.330, ending the day 0.15% higher at 1.3255. The Canadian dollar was in the plus column for a second day at 1.2475, using the 50-day moving average at 1.2465 as support for a third day.