May 5 (Reuters) - The dollar trimmed earlier losses as Treasury yields firmed following an unexpectedly robust ISM services report for April and remarks from Treasury Secretary Scott Bessent on economic growth. ISM nonmanufacturing PMI increased to 51.6 last month from 50.8 in March, with the prices paid gauge hitting a two-year high. The Federal Reserve is expected to leave interest rates unchanged on Wednesday, a decision that may prompt additional criticism from officials within the Trump administration. Bessent said the administration's economic agenda would drive long-term investment to the U.S. economy and potentially boost growth to 3%, adding that U.S. financial markets would weather short-term turbulence.
Asian currency gains weighed on the broader dollar though trading volumes were lighter than usual due to markets being closed in the U.K., Japan, Hong Kong and mainland China.
EUR/USD hovered in a narrow range above its 21-day moving average at 1.1294, while risk reversals shifted in favor of euro calls amid broad dollar weakness. Regional politics may be an issue for the euro later this month as hard-right eurosceptic George Simion looks to challenge an independent centrist in Romanian elections on May 18.
GBP/USD edged up in modest volume ahead of an expected Bank of England rate cut on Thursday. The central bank's policy statement will be closely watched to assess the impact of U.S. tariffs on the policy outlook. USD/JPY pared earlier losses as Treasury yields firmed. A session close above its 21-day moving average of 143.65 and Ichimoku conversion line of 143.73 is helping to curb downward momentum, while the base line offers resistance at 145.19.
Treasury yields were up 1 to 3 basis points. The 2s-10s curve was up about 1 basis points to +48.2bp.
The S&P 500 eased 0.20% in mixed trading. Oil prices slid 2% after OPEC+ decided to expedite its output hikes.
Gold rose 2.6% driven by a weaker dollar and haven demand.
Copper edged up 0.48%
Heading toward the close: EUR/USD +0.21%, USD/JPY -0.77%, GBP/USD +0.18%, AUD/USD +0.43%, DXY -0.25%, EUR/JPY -0.56%, GBP/JPY -0.59%, AUD/JPY -0.31%.(Editing by Burton Frierson Reporting by Robert Fullem)
