The US dollar rallied today as the manufacturing index showed that growth of the sector accelerated last month. The data confirmed that the US economy is recovering, giving incentive for the central bank to reduce monetary accommodation and start tightening earlier.
The manufacturing index of Institute for Supply Management rose from 54.9 percent in April to 55.4 percent in May. The reading was slightly below the forecast of 55.7 but it was still above the neutral 50.0 level and indicated faster growth. Initially, the report showed a drop of the gauge, but it turned out to be a software error. The report was corrected later and said:
We apologize for this error. We have recalculated and confirmed that the actual index indicates that the economy is accelerating
Positive economic data gives an edge to dollar bulls who wait anxiously for the next move from the Federal Reserve. US non-farm payrolls are the most anticipated economic release this week, and they are also expected to be supportive for the greenback.
EUR/USD dropped from 1.3635 to 1.3597, and GBP/USD declined from 1.6763 to 1.6748 as of 21:17 GMT today, reaching the low of 1.6724 intraday. USD/JPY advanced from 101.84 to 102.37.
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