US Dollar Rises After Strong Service Sector Data
NEW YORK: The U.S. dollar saw an increase on Wednesday following the positive news that the services sector in the United States rebounded in May after a contraction the previous month. This data has raised uncertainty about the Federal Reserve’s plans for easing later this year. The Institute for Supply Management reported that its nonmanufacturing purchasing managers index rose to 53.8 last month, up from 49.4 in April. This reading, the highest since August, exceeded expectations of a 50.8 reading.
In afternoon trading, the dollar index was up 0.1 per cent at 104.28, after reaching 103.99 on Tuesday, its lowest point since April 9. Despite the strong ISM services data, some experts, like Vassili Serebriakov, an FX strategist at UBS in New York, believe that the U.S. economy is slowing down. However, there is still some uncertainty about the future direction of the dollar.
Looking ahead, investors are now turning their attention to the European Central Bank meeting on Thursday. The bank is anticipated to lower its deposit rate from the current record high. Furthermore, the Bank of Canada recently cut interest rates for the first time in four years, indicating that more easing could be on the horizon if inflation continues to moderate.
Overall, the U.S. dollar has shown strength against various currencies, with the euro and the Canadian dollar both experiencing shifts in response to recent economic developments. Market analysts are closely watching central banks around the world for potential policy changes that could impact currency values.
As the global economic landscape continues to evolve, investors remain vigilant about the future of major currencies and central bank decisions. The U.S. dollar’s performance in the coming weeks will likely be influenced by a combination of economic data releases and policy decisions made by key financial institutions.
