The U.S. dollar climbed higher against its major peers on Monday as traders looked ahead to the upcoming rate decision from the Federal Reserve.
The Fed, which begins its two-day meeting on Tuesday, is widely expected to hike rate by 50 basis points on Wednesday. The central bank’s accompanying statement is likely to provide clues about how aggressive could be its plans with regard to policy tightening in the coming months.
The monetary policy announcements from the European Central Bank, the Bank of England and the Reserve Bank of Australia are also due this week.
In U.S. economic news today, the Institute for Supply Management released a report that showed growth in U.S. manufacturing activity unexpectedly slowed in the month of April.
The ISM said its manufacturing PMI fell to 55.4 in April from 57.1 in March. While a reading above 50 still indicates growth in the sector, economists had expected the index to inch up to 57.6.
A separate report released by the Commerce Department showed a modest increase in U.S. construction spending in the month of March.
The unexpected decrease by the headline index came as the employment index slumped to 50.9 in April from 56.3 in March.
On Wednesday, the ISM is scheduled to release a separate report on activity in the service sector in the month of April. The services PMI is currently expected to inch up to 58.9 in April from 58.3 in March.
A report released by the Commerce Department showed construction spending in the U.S. inched up by 0.1 percent to an annual rate of$1.731 trillion in March after rising by 0.5 percent to a revised rate of $1.729 trillion in February. Economists had expected construction spending to increase by 0.7 percent.
The uptick in total construction spending came as spending on private construction rose by 0.2 percent to an annual rate of $1.380 trillion.
The yield on U.S. 10-year Treasury note briefly touched the 3 percent mark today, lending further support to the dollar’s climb.
The dollar index surged to 103.75 before easing to 103.62, but still remains fairly up with a gain of about 0.65 percent.
Against the Euro, the dollar is trading at $1.0510, firming from $1.0550.
The dollar is trading at $1.2494 against Pound Sterling, strengthening from $1.2576.
Against the Japanese currency, the dollar is stronger, fetching 130.15 yen, compared with 129.85 yen on Friday.
The dollar is marginally up against the Aussie at 0.7054. The Swiss franc, at 0.9776 a dollar, is weaker by more than 0.4 percent, while the Loonie is down at C$1.2880 a dollar, weakening from C$1.2859.