Dollar Struggles After Weak ADP

The YEN weakened against both the Dollar and the Euro during the night with the USDYEN rising by over 100 pips to highs of 92.50 whilst the EURYEN surged even higher by 130 pips to 132.80. Both pairs have given back some ground in the last hour.

Just recently, the US ADP Employment Change for December was posted recording a disappointing drop of 84k amidst expectations of -75k. Subsequently, the dollar has declined slightly with the EURUSD climbing by about 20 pips to 1.4370(see hourly chart) since the release.

The British pound has been under pressure during the night following the news that the UK Prime Minister, Gordon Brown, could face a leadership battle from within the ranks of his own party. In addition, the UK Consumer Confidence Index was released earlier this morning recording a dramatic drop from a revised 74 to 69. This result was the largest decline in over 12 months resulting from stimulus measures being withdrawn as well as VAT returning to 17.5%. As a result, the GBPUSD plunged to lows of 1.5960 before recovering slightly to its current 1.5975.

The Euro-zone published both its Industrial New Orders for October and its Producer Price Index a few hours ago. The former posted a drop of 2.2% against expectations of -1.0% whilst the latter rose 0.1% versus an anticipated 0.2%. These negative readings did have an initial dampening effect on the Euro’s bullish advance but have now been overshadowed by the US ADP result.