The dollar rose to its highest level in nearly two weeks against a basket of currencies on Monday, ahead of the anticipated 25 basis point interest rate hike by the Federal Reserve, and after data showed the recovery of the U.S. manufacturing sector in April from its lowest levels in three years. Investors will focus on whether the Federal Reserve will signal a temporary halt to interest rate increases after May, or if it will decide on another hike in June following its two-day meeting which concludes next Wednesday. Mark Chandler, chief market strategist at Bannockburn Global Forex in New York, stated, "Many believe the Fed will indicate that it will pause, but I don't think it can do that... the Fed wants to keep some options and flexibility."
The dollar rose after the Institute for Supply Management reported on Monday that the U.S. manufacturing purchasing managers' index increased to 47.1 last month from 46.3 in March, which was the lowest reading since May 2020. The U.S. jobs data scheduled to be released on Friday will be the focus this week, with expectations of a jobs increase of 180,000 in April.
In the latest transactions, the dollar index rose 0.41% to 102.13 after reaching a high of 102.19, the highest level since April 19. The euro fell 0.43% to $1.0970. The dollar also rose against the Japanese yen by 0.84% to 137.46 yen, the highest level since March 8. Additionally, the Australian dollar increased by 0.20% to $0.6630, recovering from a seven-week low of $0.6573 recorded on Friday.
