On Monday, the U.S dollar (USD) surged to come an inch closer to breaking above the ¥125 level for the first time in 13 years while still continuing its dominance over the euro (EUR).
This increase came after data was released by the ISM which was better expected prompting investors to believe that the Federal Reserve is likely to increase interest rates this year.
According to the Institute for Supply Management, their manufacturing index rose by 1.3% to 52.8% in May. This was up from 51.5 percent in April.
FXTM Chief Market analyst, Jameel Ahmad, commented that the data further proves that the “economic slowdown in the US economy was just a temporary trend”.
Meanwhile, Janet Yellen, Federal Reserve Chairwoman, said that the rates hike is likely to be this year if the trend on U.S. economic data continues. Higher rates will mostly likely increase yield on deposits held in the greenback currency and will of course cause the USD to strengthen even more.
Meanwhile, the euro (EUR) continued with its poor run after the ISM report yet when Bloomberg reported that the European Central Bank President Mario Draghi, IMF head Christine Lagarde and German Chancellor Angela Merkel will meet to discuss a viable rescue plan for Greece’s debt woes, the euro (EURUSD, +0.0458) slightly rose to trade at $1.0930 from the $1.0906 posted in New York last Friday.
Greece is set to make its first payment of $300 million to the IMF on Friday to offset a debt totaling $1.6 billion.
Meanwhile, the dollar (USDJPY, -0.10%) traded at ¥124.80 which is interestingly the highest level since 2002 and is slightly higher than ¥124.18 posted late Friday.
Elsewhere, the U.S Dollar index (DXY, -0.10%) which is used to measure the dollar’s strength against a collection of rival currencies, rose 0.5% to trade at 97.43. Also, the pound (GBPUSD, +0.0395%) fell to $1.5203 from $1.5296 posted late Friday.
MT4 Chart: EUR/USD
MT4 Chart: USD/JPY
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