The dollar index fell 0.17% on Wednesday as the S&P 500 climbed to a new record high, reducing demand for dollar liquidity, while weaker-than-expected US economic reports added pressure. The July ADP employment change rose by 44,000, missing the forecast of 65,000, and the July ISM services index edged up 0.1 to 54.1, below the expected 54.5, though the prices paid sub-index unexpectedly jumped 2.6 to 70.3. Limiting the dollar's decline were hawkish comments from Kansas City Fed President Jeff Schmid, who said tighter policy is needed to bring inflation to the 2% target, and Minneapolis Fed President Neel Kashkari, who called for immediate incremental rate hikes. Markets now price a 54% chance of a quarter-point rate increase at the September FOMC meeting.
Weak ADP and ISM data reduce rate hike odds, pressuring policy rate expectations.
Disappointing economic data and record stock rally lower demand for safe-haven bonds, pushing yields down.
