US dollar higher, euro undermined by ECB rate-cut expectations

New York (June 3)   The US dollar rose on Monday, aided by subdued German inflation figures and slower-than-expected manufacturing growth in the euro zone, both of which piled pressure on the European Central Bank to ease monetary policy aggressively this week.

The US dollar index rose 0.40 per cent against a basket of currencies from its main trading partners, hitting a 3-1/2-month high.

Attention remains squarely on the ECB's policy meeting on Thursday and the US payrolls report for May on Friday.

"The euro has been trading on the softer side in general as we go into the ECB meeting as there is some level of caution here," said Alan Ruskin, global head of G10 currency strategy at Deutsche Bank in New York.

Currency speculators increased short euro positions to 16,633 contracts from 9,220 last week, according to data for the week ended May 27
released by the Commodity Futures Trading Commission on Friday.