The dollar rose to a nearly two-week high against a basket of currencies on Monday.as, before a meeting of the Federal Reserve in which the bank is expected to raise rates by 25 basis points and after data showed that US manufacturing activity moved away from a three-year low in April.
The dollar index rose 0.41% on the day to 102.13, after hitting 102.19, a high since April 19.. The euro fell 0.43% to $1.0970. The single currency remains just below the one-year high of $1.1096 reached last Wednesday.
Investors will focus on if the Fed indicates that it expects to pause rate hikes after May, or if it keeps alive the possibility of a further increase in June or later.
In the market it is considered that if inflation remains high, the Fed may continue with its cycle of monetary tightening, assuming the labor market and other parts of the economy remain strong.
The dollar rose after the Institute for Supply and Management (ISM) said Monday that its manufacturing PMI rose to 47.1 last month from 46.3 in March, marking the lowest reading ever. since May 2020.
Other data on Monday showed US construction spending rose more than expected in March.buoyed by investment in non-residential structures, but single-family home construction remained depressed in the face of higher mortgage rates.
The dollar rose on Friday after learning that core inflation remained high in March. The market will also be watching next week’s consumer price inflation data for further signs that inflation remains high.
Friday’s jobs data is the main focus of economic attention this week. Employers are expected to have added 180,000 jobs in April.
The market expects the European Central Bank (ECB) to raise rates for the seventh consecutive time on Thursday, with a 50 basis point hike on the table.
The yen continued to weaken against the dollar after the Bank of Japan kept interest rates ultra-low on Friday, but announced a plan to review its previous monetary policy measures. The dollar rose 0.84% to 137.46 yen, the highest level since March 8.
Trading volumes were thin on Monday, with markets in many countries closed for the May Day holiday.
Source: Ambito
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