The US dollar had a positive day yesterday, as investors speculated on the future prospects of the economy and its currency. With reports and data on the economy showing that it is strengthening, the evidence and encouragement for interest rate rises stateside has been increasing – it was this that helped push the dollar higher.
The sentiment was supported by the first major US data of the week, as the Manufacturing Purchasing Managers’ Index (PMI) from the Institute for Supply Management came out better than expected. The figure rose unexpectedly, to its highest level since March 2011. As a result, the dollar extended its 12-month highs against the euro, while also improving against sterling.
Today is slightly quieter, with two smaller pieces of data to be released. Firstly, factory orders will provide further industrial data, while the Beige Book is due in the evening. This is the public part of a trio that helps the US Federal Reserve to make a decision on the interest rates, and so could provide further hints as to when a hike may be imminent.