© Reuters. FILE PHOTO: US dollar and euro banknotes are shown in this illustration taken on July 17, 2022. REUTERS/Dado Rovik/Illustration
Written by Karen Britel
NEW YORK (Reuters) – The dollar rose on Monday after data showed that U.S. manufacturing fell from a three-year low in April ahead of a busy week for central banks, as the Federal Reserve is expected to raise interest rates by an additional 25 basis points on Wednesday.
The Institute for Supply Management (ISM) said its manufacturing PMI rose to 47.1 last month from 46.3 in March, the lowest reading since May 2020.
“Overall, the data shows that the manufacturing sector remains in the doldrums, but there are some encouraging signs of stabilization in the details,” Thomas Simmons, money market economist at Jefferies, said in a note.
Other data on Monday showed that construction spending in the United States rose more-than-expected in March, supported by investment in non-residential structures, but construction of single-family homes remained subdued amid rising mortgage rates.
Trading was largely subdued, however, as investors waited for a two-day wrap-up of the Federal Reserve’s meeting, where the focus will be on whether the US central bank signals it expects to halt interest rate increases after May, or if it holds the possibility of a further hike in the future. June or later alive.
“A lot of people are saying the Fed is going to signal that it’s going to pause, and I don’t think it can do that,” said Mark Chandler, chief market strategist at Bannockburn Global Forex in New York, adding that “the Fed wants to maintain some discretion and flexibility.”
The dollar rose on Friday after data showed that core inflation remained high in March. Consumer inflation data next week will also be watched for further indications that inflation will continue to rise.
The jobs data on Friday is the main economic focus for this week. It is expected to show that employers added 180,000 jobs in April.
It was last up 0.35% on the day at 102.08. The euro fell 0.37% to $1.0974. The single currency is holding just short of the one-year high of $1.1096 reached last Wednesday.
The European Central Bank is widely expected to raise interest rates for the seventh consecutive meeting on Thursday, with a 50 basis point increase on the table.
The yen recorded its lowest level in seven weeks against the dollar after the Bank of Japan kept interest rates very low on Friday but announced a plan to review its previous moves in monetary policy.
The dollar was last up 0.74% at 137.35 yen.
The RBA is also widely expected to extend its interest rate pause on Tuesday.
The dollar was last up 0.42%, at $0.6645. It is up from a seven-week low of $0.6573 on Friday.
Volumes were thin on Monday with markets closed in many countries for the Labor Day holiday.
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Coin offer prices at 11:06 am (1506 GMT)
Description RIC Last US Close Pct Change YTD Pct High Bid Low Bid
previous change
a class
Dollar Index 102.0800 101.7300 +0.35% – 1.362% +102.1000 +101.6200
EUR/USD 1.0974 USD 1.1017 -0.37% + 2.43% + 1.1043 USD + 1.0973 USD
USD/JPY 137.3450 136.3400 +0.74% +4.76% +137.3550 +136.2000
EUR/JPY 150.78 150.08 +0.47% +7.46% +150.9500 +150.0400
USD/CHF 0.8959 0.8944 +0.17% -3.11% +0.8959 +0.8916
GBP/USD 1.2510 USD 1.2569 -0.46% + 3.45% + 1.2570 USD + 1.2511 USD
USD/CAD 1.3543 1.3539 +0.03% -0.04% +1.3583 +1.3530
AUD/USD 0.6645 USD 0.6617 +0.42% -2.52% + 0.6668 USD + 0.6608 USD
EUR/CHF 0.9831 0.9853 -0.22% -0.65% +0.9855 +0.9823
EUR/GBP 0.8771 0.8766 +0.06% -0.83% +0.8794 +0.8760
0.6173 NZD 0.6189 -0.17% -2.70% + 0.6199 NZD + 0.6167 USD
dollars / dollars
Dollar / Norway 10.7470 10.6520 +0.69% +9.28% +10.7490 +10.6710
Euro / Norway 11.7970 11.7471 +0.42% +12.42% +11.8170 +11.7191
Dollar / Sweden 10.3282 10.2505 +0.33% -0.76% +10.3303 +10.2467
Euro / Sweden 11.3346 11.2976 +0.33% +1.66% +11.3445 +11.2885