Dollar climbs as Fed rate cut bets recede- again

Markets brace for extended Fed hawkishness after upbeat U.S. data.

Dollar climbs as Fed rate cut bets recede- again

Once again, markets are abuzz over prospects of the Federal Reserve potentially holding off on interest rate cuts for longer than initially anticipated.

The U.S. dollar has continued powering higher on Tuesday, hovering near a 4-1/2-month high against major peers. The currency's strength stemmed from traders pushing back expectations for the Fed's first rate cut this year, following surprisingly strong U.S. manufacturing data.

The greenback renewed a six-week high versus the euro (EUR/USD), trading at $1.07335, and near the same feat against the pound at $1.25455 (GBP/USD). Upbeat economic figures on Monday showed an expansion in U.S. manufacturing, confounding forecasts of a contraction.

Fears of intervention by Japanese authorities slowed the dollar's rally against the yen, which traded at 151.75 per dollar (USD/JPY). However, long-term U.S. Treasury yields, closely tracked by the yen pair, jumped to a two-week high.

Gold bulls on stampede as prices hover near record highs
Precious metal continues upward charge despite mixed economic signals.

Gold, typically buoyed by falling yields, remained resilient after Monday's dip from record peaks.

Markets now price in a 61.3% chance of a Fed rate cut in June, down from 70.1% a week ago, as per CME's FedWatch tool. The dollar index (DXY=) edged 0.05% higher to 105.05.

The Australian dollar flatlined at $0.6490 (AUD/USD), after Monday's near one-month low. The New Zealand dollar eased 0.1% to $0.5947 (NZD/USD), nearing a 4-1/2-month trough.

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