The U.S. dollar began the week positively after edging slightly higher against its major peers on Monday in the wake of strong economic growth data in the United States on Friday. However, the greenback remained on course for a sharp monthly drop as investors remained bearish towards the currency due to improved outlooks for its British and European counterparts.
The dollar climbed by 0.6 percent or 0.73 cents against the euro to touch 1.2355 dollars per euro on Monday, its highest level since January 24. However, the euro is still up by more than 2.6 percent since the beginning of 2018.
The dollar also rose against the British pound to increase by 0.6 percent or 0.86 cents and trade at 1.4060 dollars per pound before partly giving a part of its gain and moves down to 1.4084 dollars. The dollar is down by 4.2 percent against the British pound since the beginning of the month.
The Dollar Index, which tracks the strength of the greenback against a basket of its major peers, gained 0.34 points today to reach 89.40, the index’s best level since January 25.
An economic report released by the U.S. Bureau of Economic Analysis showed that gross domestic product increased by 2.7 percent in 2017 after rising by 1.5 percent in 2016. The data has supported the greenback against its major peers, despite slow growth in the fourth quarter of the year that disappointed expectations.
The data did not change investors’ bets on future monetary policy decisions from the Federal Reserve, which limited the level of support the dollar received. The CME FedWatch tool, which tracks federal futures prices to calculate probabilities of upcoming interest rate changes, shows a 70.1 percent chance of an interest rate hike in March.
The probability drops to 69.2 percent in May and 39.2 percent in June to reflect investors uncertainty about the path the Federal Open Market Committee will be following this year. The committee will hold its next policy meeting on January 31, during which policymakers are widely expected to maintain interest rates unchanged but the meeting’s minutes may provide some insights on monetary policy outlook over the short term.