Dollar weakens on downbeat data

The U.S. dollar retreated against other major currencies on Wednesday as newly released data of the U.S. service sector and private sector employment failed to meet expectations. The Institute for Supply Management's index of the U.S. non- manufacturing sector fell to 54.4 in March from 56 of the previous month, indicating a slower growth in the service sector. The data weighed on the dollar as the service sector accounts for almost 90 percent of the U.S. economy. The U.S. private sector continued to add jobs in March, but posted the smallest gain in the past five months, mainly because the construction sector held off on hiring. The Automatic Data Processing (ADP) reported U.S. private companies added 158,000 jobs in March, lower than the previous month and market expectation. Meanwhile, the yen strengthened versus major currencies after the Bank of Japan began a two-day policy meeting on Wednesday. It is the first policy meeting for the new governor Haruhiko Kuroda. Although he has repeatedly said that he would do whatever it takes to reach the 2 percent inflation target in two years, investors are betting that his real follow-up may be less aggressive. Investors remained cautious ahead of the monthly U.S. employment data for March which is due to be released on Friday, and the policy meeting of the European Central Bank. In late New York trading, the euro climbed to 1.2846 dollars from 1.2814 dollars of the previous session and the British pound rose to 1.5143 dollars from 1.5107 dollars. The Australian dollar increased to 1.0463 dollars from 1.0448 dollars. The dollar bought 92.87 Japanese yen, lower than 93.37 in the previous session. It edged down to 0.9448 Swiss francs from 0.9493 Swiss francs and went down to 1.0144 Canadian dollars from 1.0148 Canadian dollars of the previous trading day.