Dollar surges again.

The revamped ADP employment report recorded an increase in private-sector payrolls of 132,000 for August after an increase of close to 270,000 for July and below consensus forecasts of 290,000 for the month.

There was a significant dip in jobs for the smallest companies and mid-sized employers of 250-499 employees also recorded an employment decline for the month while other categories posted net gains. ADP reported that annual pay was up 7.6% over the year with relative stability in annual growth over the past few months.

Headline Euro-Zone consumer process increased 0.5% for August with the year-on-year rate increasing to a fresh record high of 9.1% from 8.9% and slightly above consensus forecasts of 9.0%. The core inflation rate increased to 4.3% from 4.0% which was above market expectations of 4.0% and also a fresh record high.

Cleveland Fed President Mester stated that it is far too early to conclude that inflation has peaked while wage pressures show little sign of abating. In this context, she did not anticipate a cut in interest rates next year.

US Treasuries have remained under pressure over the past 24 hours with the 2-year yield at fresh 14-year highs and the 10-year yield at 3.20%.

China’s Caixin PMI manufacturing index dipped back into contraction at 49.5 for August from 50.4 previously and below expectations which undermined confidence in the outlook.

Higher yields helped underpin the US dollar and there was also an element of defensive US support as equities continued to slide.

The yen remained under pressure despite risk aversion with USD/JPY surging to a 24-year high near 139.70 before a slight correction.

The Euro further net support from speculation that the ECB could sanction a 75 basis-point rate hike in September. There were still important concerns surrounding the Euro-Zone energy sector. The dollar declined fractionally after the US jobs data. The US currency also lost some ground into the London fix with month-end position adjustment.

Overall dollar support remained strong, especially with risk appetite under pressure which triggered defensive demand. EUR/USD found support at 0.9970 with a peak above 1.0050. Dollar strength dragged EUR/USD back to near 1.0000 on Thursday.

Overall yield spreads continued to undermine the yen and USD/JPY peaked near 139.70

The Swiss franc lost further ground as global yields increased. EUR/CHF moved above the 0.9800 level while USD/CHF posted net gains to 0.9800.

Sterling remained under pressure as confidence in the UK outlook continued to deteriorate.

GBP/USD posted a fresh 30-month lows around 1.1570. GBP/EUR hit 2-month lows just below 1.1560 before stabilising.

Another retreat in oil prices undermined the Canadian dollar. USD/CAD strengthened to highs at 1.3170 as dollar strength also sapped support. AUD/USD failed to hold gains and dipped to test the 0.6800 level before a slight recovery.

Economic Calendar

15:00ISM Manufacturing PMI52.152.8

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.