Apr 2 2024: The U.S. dollar maintained stability near its over four-month high during European trade on Tuesday, buoyed by robust economic data that tempered expectations of early rate cuts by the Federal Reserve.
At 05:40 ET (10:40 GMT), the Dollar Index, tracking the greenback against a basket of six major currencies, remained largely unchanged at 104.755, just below the previous session’s peak of 105.07, marking its highest level since mid-November last year.
The dollar’s strength was bolstered by signs of growth in U.S. manufacturing, which led traders to dial back expectations of imminent interest rate cuts by the Fed.
According to the CME’s FedWatch tool, the probability of a Fed rate cut in June has decreased to 61.3%, down from around 70.1% a week ago.
Further economic data awaited on Tuesday includes job openings and durable orders for February, ahead of Friday’s highly anticipated payrolls report for March.
The pound sterling saw gains following strong manufacturing data, with GBP/USD rising 0.2% to 1.2569. British manufacturers reported their first overall growth in activity in 20 months in March, indicating an end to last year’s shallow recession. The S&P Global/CIPS UK Manufacturing Purchasing Managers’ Index rose to 50.3, surpassing February’s 47.5.
Meanwhile, in Europe, EUR/USD fell 0.1% to 1.0738 as eurozone manufacturing activity declined further in March, albeit slightly beating a preliminary estimate.
USD/JPY traded slightly higher at 151.68, near its recent 34-year low of 151.975, with Japanese authorities watching for potential intervention to address disorderly currency moves. USD/CNY rose 0.1% to 7.2358, with the yuan reaching a 4-1/2-month low against the dollar, despite efforts by state-owned banks to sell the U.S. currency.