US Dollar Strengthens On Fed Rate Hike Expectations
Ottawa-Canada (Nov 3) The US dollar climbed against its key counterparts in early European deals on Tuesday, as positive US economic reports released overnight rekindled hopes about December rate hike by the Federal Reserve .
The US manufacturing activity expanded more-than-expected in October, a report released by the Institute for Supply Management showed.
The ISM said its purchasing managers index came in at 50.1 in October, slightly up from expectations for a reading of 50.0. In September, the PMI increased to 50.2.
With spending in private and public construction both increasing, the Commerce Department released a report on Monday showing that US construction spending rose more than expected in September.
The report said construction spending climbed 0.6% to an annual rate of USD1.094 trillion in September from the revised August estimate of USD1.088 trillion . Economists had expected spending to rise by 0.4%.
Since the Federal Reserve last week suggested that December interest rate hike remains a possibility, traders are eagerly awaiting the monthly jobs report due out on Friday. The strength of the jobs report could have a significant impact on expectations regarding whether the Fed will raise rates next month.
The currency was trading in a negative territory in Asian trading, as Asian markets were higher after Australia's central bank kept alive the prospects of an interest rate cut in December.
In European trading, the greenback climbed to 4-day highs of 1.5403 against the pound and 1.0978 against the euro, coming off from its previous lows of 1.5445 and 1.1030, respectively. The greenback is likely to locate resistance around 1.08 against the euro and 1.53 against the pound. The greenback finished Monday's trading at 1.1014 against the euro and 1.5416 against the pound.
Reversing from an early low of 0.9844 against the Swiss franc, the greenback climbed to a session's high of 0.9892. The greenback is seen finding resistance around the 1.00 region. The pair was worth 0.9855 when it ended yesterday's trading.
The greenback bounced off to 120.80 against the yen, from a low of 120.60 hit at 2:15 am ET . The greenback is thus heading to pierce its early 4-day high of 120.85. The next possible resistance for the greenback may be found around the 122.00 mark.
The greenback strengthened to 4-day highs of 1.3126 against the loonie and 0.6711 against the kiwi, reversing from its early lows of 1.3080 and 0.6779, respectively. If the greenback extends rise, it may locate resistance levels of around 1.326 against the loonie and 0.66 against the kiwi.
The US factory orders data for September is slated for release in the New York session.
At 12:00 pm ET , Swiss National Bank Governing Board member Thomas Jordan will deliver a speech in Geneva .
An hour later, European Central Bank President Mario Draghi is expected to speak at the Opening of the European Cultural Days 2015 organised by the European Central Bank in Frankfurt .
Later in the day, Bank of England Deputy Governor Andrew Bailey will take part in banking conference "Banking Reform - culture, competition and financial stability, hosted by Westminster Business Forum " in London .
Source: AllianceNews
