Dollar Rises from A Five-Month Low

Dollar Rises

At 2:55 AM ET (0755 GMT), the Dollar Index, which follows the dollar against a basket of six other currencies, was up 0.1% at 89.935, following dipping as low as 89.662 on Tuesday, accosting the lowest after Jan. 7 at 89.533.

EUR/USD traded flat at 1.2216, not distant from a near five-month high of 1.2266 reached last week.

USD/JPY increased by 0.2% to 109.67.

GBP/USD rose from 0.1% to 1.4153, sliding off a three-year high of 1.4250 touched Tuesday.

USD/CAD was essentially flat at 1.2067 after dropping to a fresh six-year low of 1.2007 overnight.

On Tuesday, the Institute for Supply Management stated its index of U.S. manufacturing activity expanded in May. This was a result of pent-up demand among a reopening economy advanced orders. The ISM’s index of national factory activity rose to a reading of 61.2 last month from 60.7 in April. It went over the 60.9 forecasts.

A strong reading on the whole, continuing to the general impression that the U.S. economy is bouncing strongly. This could force the Federal Reserve to normalize monetary policy more promptly than current guidance would imply.

Particularly with the ISM survey’s gauge of prices paid by manufacturers hanging near levels last observed in July 2008, when the economy was in the throes of the Great Recession.


Nevertheless, the ISM’s measure of factory employment fell to a six-month low. This is something that could well keep the Fed’s hand ahead of Friday’s official jobs report for May, especially after April’s much-weaker-than-expected reading.

Subsequently, AUD/USD was under 0.1% at 0.7748. Following Australia’s economy increased faster than calculation in the first three months of the year. Simultaneously, gross domestic product improved 1.8% from the final quarter of 2020.

USD/CNY increased 0.1% to 6.3829. The pair climbed from the three-year low of 6.3526 touched on Monday as policymakers took measures to cool its advance, including increasing banks’ FX reserve requirements.

USD/TRY surged 1.1a% to 8.6208. The Turkish lira tumbled to fresh record lows following President Recep Tayyip Erdogan’s renewed calls for lower interest rates. It will extend the present unorthodox belief that lower borrowing costs will support slow inflation.

This will raise the pressure on central bank Governor Sahap Kavcioglu, who was lately installed after Erdogan removed the previous governor for tightening policy too much.

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