The U.S. dollar jumped to a 3 -week high after being driven by stronger -than -expected U.S. economic data readings and the Federal Reserve’s (Fed) announcement to halt one of its programs set to support the economy during a pandemic.
In a statement on Wednesday, the Fed will close a program of buying tens of billions of dollars of corporate assets that are critical to businesses during the recession.
The news has caused global stock markets to plummet and the greenback higher, coupled with optimistic US data readings.
Most recently, the ADP employment report showed private employment growth soared to nearly 1 million in May, with a reading of 978,000 already recorded.
To further support the reading, the number of U.S. jobless claims also reportedly dropped significantly last week, with a drop below 400,000 for the first time since the pandemic outbreak in the U.S. began.
This gives a positive impression on the reading of the US NFP employment report that will be published tonight, which is expected to increase by 664,000 in May.
If the NFP reading shows a stronger increase, the US dollar is expected to continue to rise higher.
Meanwhile, the ISM non -manufacturing index reached its highest level, signaling that services activity in the US is recovering strongly. However, the employment component in this sector is seen to be slightly declining.
The surge of the US dollar has pushed most major currencies lower, particularly the Aussie dollar which plunged to a seven -week low despite having been shown by stronger Australian economic data readings.
