By FX Empire.com
The pair rebounded after two days of decline after the release of a report showing that construction sector expansion widened to 53.9 in Oct. from 50.1 a month earlier.
The optimistic report offset the drop in U.K. PMI manufacturing to 47.4 in Oct. from the prior expansion of 51.1 in Sep, before the release of the services gauge on Thursday which will show a drop to 52.0 in October from the prior 52.9, as of 09:30 GMT, according to median estimates.
Moreover, the pair was affected by hopesU.S.policy makers to announce in their two-day meeting some details about a third round of stimulus.
On the flip side, data released on Wednesday showed that theU.S.private sector employment grew by 111,000 last month, beating estimates of 100,000 while September’s reading was upwardly revised to 1116,000 from the initial 91,000.
The report provided some good signs about the status of the labor sector before the release of the infamous non-farm payrolls on Friday.
Hence, the dollar was affected by the upbeat report as the improvement in the sentiment dampened demand on the greenback as a safe haven on the one hand and as talks about further QE pushed it down, as more money printing will cause it to depreciate due to excess supply, on the other.
Nonetheless, the dollar’s losses were minimized as concerns stemming from Greece raised doubts about the European plan announced last week.
Greek Prime Minister George Papandreou mentioned that a referendum on the latest euro area bailout out package will determine the future of his country in the euro.
Fears reignited in markets since in the case of rejecting the bailout in the referendum, the debt-mired economy would be prone to a disorderly default which might end its membership in the euro.
Also, the European rescue fund has delayed the issuance of a 3 billion euro bond to financeIreland’s bailout package as a result of the turmoil in markets, according to news report released today.
On Thursday, the U.S. economy will release initial jobless claims for the week ended Oct. 28 and continuing claims for the week ended Oct. 21 will be available at 12:30 GMT, followed by ISM non-manufacturing for Oct., as of 14:00 GMT, which is predicted to show widening expansion to 54.0 from the prior 53.0.
The reports are expected to be watched carefully as investors will wait for another clue for the improvement in the labor sector before the jobs report while making sure the services sector is showing progress, especially after the drop in manufacturing.
