The US Dollar (USD) fell below 99, benefiting the pound, NOK, AUD, and NZD, amid signs of weak labor demand and easing service-sector inflation pressures. ADP data showed a 32k decline in private payrolls, while ISM services prices paid dropped sharply, supporting expectations of softer US economic conditions ahead of the FOMC meeting, MUFG's FX analyst Lee Hardman reports.

High-beta currencies gain on softer USD

"The US Dollar has continued to trade at weaker levels overnight after yesterday’s sell-off. The dollar index fell back below the 99.000-level for the first time since late October. The main beneficiaries from the weaker US dollar in recent days have been the high beta G10 currencies of the pound, Norwegian krone, Australian and New Zealand dollars. "

"The latest ADP survey estimated that private employment contracted by -32k in November following an estimated increase of +47k in October. It has supports our view that labour demand remains weak heading into year end. With the release of the nonfarm payrolls report for November delayed until after the December FOMC meeting when it is scheduled to be released on 16th December, FOMC participants will have to rely more on alternative measures of labour market health to assess whether to cut rates this month."

"At the same time, the release of the ISM services survey for November should help to ease concerns over the inflationary impact of higher tariffs on imported goods spilling over into higher prices in the service sector. The prices paid sub-component dropped back sharply by 4.6 points to 65.4 in November. It was the lowest reading since April 2025 and follows an average reading of 69.6 in the previous four months."