Dollar index pushes higher on upbeat ISM report

Investing.com –

Investing.com – The dollar pushed higher against the other major currencies on Wednesday, boosted by data showing that U.S. service sector activity grew at a faster rate than expected in January, while concerns over Greece’s future in the euro zone continued to weigh on sentiment.

In a report, the Institute of Supply Management said its non-manufacturing purchasing manager’s index increased to 56.7 last month from a reading of 56.2 in December. Analysts had expected the index to inch up to 56.3 in January.

The data came after payroll processing firm ADP said non-farm private employment rose by 213,000 last month, below expectations for an increase of 225,000.

The economy created 253,000 jobs in December, whose figure was upwardly revised from a previously reported 241,000.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.48% to 94.21.

EUR/USD dropped 0.49% to 1.1422 as markets were jittery amid fresh concerns over Greece, following reports that the European Central Bank is unwilling to back government plans to renegotiate the terms of the country’s €140 billion bailout.

Earlier Wednesday, data showed that the euro zone composite purchasing managers’ index, which measures activity in the region’s manufacturing and services sectors rose to 52.6 up from a preliminary estimate of 52.2 and a final reading of 51.4 in December.

Output growth expanded in Germany, Italy and Spain, but the downturn in the French economy extended into its ninth month.

A separate report showed that euro zone retail sales rose 2.8% in December from a year earlier, the strongest increase in nearly eight years.

The pound was higher against the dollar, with GBP/USD climbing 0.43% to 1.5232.

Data earlier showed that the Markit/CIPS Services PMI increased to 57.2 last month from a reading of 55.8 in December. Analysts had expected the index to rise to 56.3 in January.

Elsewhere, USD/CHF added 0.27% to trade at 0.9262, while USD/JPY edged down 0.12% to 117.45.

The Australian dollar turned lower, with AUD/USD sliding 0.53% to 0.7750, while NZD/USD rose 0.12% to 0.7362. Statistics New Zealand earlier reported that the number of employed people rose by 1.2% in the last quarter, beating expectations for a 0.8% gain.

The report also showed that New Zealand’s unemployment rate rose to 5.7% in the fourth quarter of 2014 from 5.4% in the three months to September.

Separately, Reserve Bank of New Zealand Governor Graeme Wheeler said that interest rates will remain on hold for a prolonged period of time.

Meanwhile, the Canadian dollar pushed lower, with USD/CAD rallying 1.37% to 1.2585 after the Richard Ivey School of Business said its PMI fell to a nearly four-year low of 45.4 last month from a reading of 55.4 in December. Analysts had expected the index to decline to 54.0 in January.

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