The US dollar is losing grounds in the second half of the week, though ADP posted good enough labour market report. Earlier, traders used this report as a guideline for the outlook regarding the main report to be released on Friday. The private employment rate hiked by more than 200,000, which indicates that the US labour market in a good fettle now.
However, fluctuations of the sentiments fueled US dollar weakening. Demand for the greenback as well as risk aversion activities slackened. Extra pressure on the US Dollar index came from the soaring sterling on the recent progress in the Brexit. Specifically, it was reported that the UK and EU representatives agreed that the UK financial companies will maintain access to the EU market after the divorce. In this situation, the sterling hit 1.29, with the euro follows to toe reaching 1.14.
Still, the situation can change tomorrow after the release of the labour market report. In particular, if new jobs increase by some 200,000 and earnings rise faster, the greenback will enjoy buying boom on stronger forecasts of further monetary tightening by the US central bank.
With such scenario, the euro can lose the previous gains and fall down to the bottom of 1.13. The market may also keep track of the risk demand, as the euro-to-US dollar rate can weaken if the stock markets see further sales.