WASHINGTON (dpa-AFX) - The U.S. dollar climbed higher on Wednesday, posting gains against most of its major counterparts, as bond yields rose amid worries about inflation and imminent policy tightening by the Federal Reserve.
Traders digested the latest batch of economic data, and the central bank's Beige Book, which is a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts.
A majority of the twelve Federal Reserve districts have recently experienced slight or modest economic growth, according to the central bank's Beige Book. The book said four districts explicitly noted that the pace of growth had slowed since the prior period.
The slower growth comes as retail contacts noted some softening as consumers faced higher prices, and residential real estate contacts observed weakness as buyers faced high prices and rising interest rates.
'Contacts tended to cite labor market difficulties as their greatest challenge, followed by supply chain disruptions,' the Beige Book said.
The report added, 'Rising interest rates, general inflation, the Russian invasion of Ukraine, and disruptions from COVID-19 cases (especially in the Northeast) round out the key concerns impacting household and business plans.'
A report released by the Institute for Supply Management on Wednesday showed U.S. manufacturing activity unexpectedly expanded at a slightly faster rate in the month of May.
The ISM said its manufacturing PMI inched up to 56.1 in May from 55.4 in April, with a reading above 50 indicating growth in the sector. The uptick surprised economists, who had expected the index to dip to 54.5.
Construction spending in the U.S. increased by less than expected in the month of April, according to a report released by the Commerce Department on Wednesday.
The report showed construction spending edged up by 0.2 percent to an annual rate of $1.745 trillion in April after rising by 0.3 percent to a revised rate of $1.741 trillion in March.
Economist had expected construction spending to climb by 0.5 percent compared to the 0.1 percent uptick originally reported for the previous month.
The dollar index surged to 102.73, gaining nearly 1%, before easing slightly to 102.59.
Against the Euro, the dollar firmed to $1.0652 from $1.0735.
The dollar is trading at $1.2485 against Pound Sterling, gaining nearly 1% from $1.2603.
Against the Japanese currency, the dollar has strengthened, fetching 130.16 yen a unit, compared with 128.68 yen on Tuesday.
The dollar is little changed against the Aussie at 0.7179. The Swiss franc has weakened to 0.9632 a dollar from 0.9595.
The Loonie is down slightly at C$1.2656 a dollar. The Bank of Canada this morning raised its interest rate by 50 basis points to 1.5% as expected, and signaled further hikes to control high inflation.
With the economy in excess demand, and inflation persisting well above target and expected to move higher in the near term, the Governing Council continues to judge that interest rates will need to rise further, according to the accompanying statement.
Copyright(c) 2022 RTTNews.com. All Rights Reserved
Copyright RTT News/dpa-AFX
© 2022 AFX News
