Dollar Drifts Lower Against Major Rivals

(RTTNews) - Despite comments from the Federal Reserve Chair Jerome Powell that further monetary policy tightening, the U.S. dollar drifted lower against its major counterparts on Wednesday.

The dollar shed ground after data showed a slower pace of growth in the nation's private sector employment, but regained some ground after the Fed raised interest rate by 25 basis points and said there will be further hikes in future.

After a two-day meeting, the Fed said it has decided to raise the target range for the federal funds rate by 25 basis points to 4.50 to 4.75%.

The Fed also said it anticipates ongoing increases in interest rates will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.

During his post-meeting press conference, Fed Chair Jerome Powell said the central bank does not believe rates are yet at a sufficiently restrictive policy stance and suggested a "couple of more rate hikes" will be needed to get to that level.

However, the currency swiftly dropped again and kept sliding as the session progressed.

ADP said private sector employment climbed by 106,000 jobs in January after surging by an upwardly revised 253,000 jobs in December. Economists had expected private sector employment to increase by 178,000 jobs compared to the addition of 235,000 jobs originally reported for the previous month.

A separate report released by the Institute for Supply Management showed activity in the U.S. manufacturing sector contracted for the third consecutive month in January.

The ISM said its manufacturing PMI dipped to 47.4 in January from 48.4 in December, with a reading below 50 indicating a contraction. Economists had expected the index to edge down to 48.0.

Activity in the U.S. manufacturing sector contracted for the third consecutive month in January, the Institute for Supply Management revealed in a report released on Wednesday.

The ISM said its manufacturing PMI dipped to 47.4 in January from 48.4 in December, with a reading below 50 indicating a contraction. Economists had expected the index to edge down to 48.0. The dollar index dropped to a low of 101.04 before recovering to 101.20, still down nearly 0.9% from the previous close.

Against the Euro, the dollar fell to 1.0989, weakening from 1.0866.

The dollar weakened to 1.2372 against Pound Sterling, giving up nearly 0.5% from Tuesday's closing level.

Against the Japanese currency, the dollar weakened to 128.95 yen, down from 130.11 yen.

The dollar dropped to 0.7135 against the Aussie, losing more than 1.1%. Against Swiss franc, the dollar is down at CHF 0.9084, after settling at CHF 0.9162 on Tuesday.

The dollar is down marginally against the Loonie, fetching C$ 1.3290 a unit.