Soft ADP Data, Powell's Comments Pull Down U.S. Dollar

(RTTNews) - The U.S. dollar moved down against its major counterparts in the New York session on Wednesday, as ADP private sector employment increased less than expected in February and Federal Reserve Chair Jerome Powell reiterated the possibility of rate cuts this year.

In his testimony before the House Financial Services Committee, Powell said that it would be appropriate to begin lowering interest rates at "some point this year," if the economy evolves broadly as expected.

"But the economic outlook is uncertain, and ongoing progress toward our 2% inflation objective is not assured," Powell said.

"Reducing policy restraint too soon or too much could result in a reversal of progress we have seen in inflation and ultimately require even tighter policy to get inflation back to 2 percent," Powell stated.

"At the same time, reducing policy restraint too late or too little could unduly weaken economic activity and employment."

Powell said future interest rate decisions will be based on careful assessment of the incoming data, the evolving outlook, and the balance of risks.

Data from payroll processor ADP showed that private sector employment rose by 140,000 jobs in February after climbing by an upwardly revised 111,000 jobs in January.

Economists had expected private sector employment to grow by 150,000 jobs compared to the addition of 107,000 jobs originally reported for the previous month.

U.S. treasury yields fell following the data and Powell's remarks, further weighing on the currency.

The greenback fell to a 1-1/2-month low of 1.0915 against the euro and near a 5-week low of 1.2761 against the pound, from yesterday's closing values of 1.0856 and 1.2705, respectively. The greenback is seen finding support around 1.11 against the euro and 1.31 against the pound.

The greenback weakened to a 2-day low of 0.8806 against the franc and more than a 3-week low of 149.09 against the yen, from Tuesday's close of 0.8833 and 150.03, respectively. The greenback is likely to face support around 0.86 against the franc and 144.00 against the yen.

The greenback dropped to an 8-day low of 1.3504 against loonie and near a 2-week low of 0.6581 against the aussie, from yesterday's close of 1.3592 and 0.6503, respectively. The currency may possibly face support around 1.33 against loonie and 0.68 against the aussie.

The greenback touched a 1-week low of 0.6144 against the kiwi, retreating from a 3-week high of 0.6068 seen in the Asian session. At yesterday's close, the pair was quoted at 0.6086. Should the currency falls further, it is likely to test support around the 0.63 region.