The U.S. dollar gained ground against its major counterparts in the Asian session on Wednesday, as a pick up in U.S. manufacturing activity added to optimism over the economic recovery.
Data from the Institute for Supply Management showed on Tuesday that U.S. manufacturing activity expanded at a slightly faster pace in the month of May.
The ISM said its manufacturing PMI inched up to 61.2 in May from 60.7 in April. The uptick surprised economists, who had expected the index to come in unchanged.
Investors will be watching speeches from Fed officials Raphael Bostic and Charles Evans, as well as the Federal Reserve’s beige book report for clues on the policy outlook.
Markets are searching for fresh catalysts, as concerns prevailed over rising inflation that could fuel a debate about tapering QE program.
All eyes are on U.S. payrolls data due on Friday that can shed more light on economic recovery.
The greenback climbed to 2-day highs of 1.2200 against the euro and 109.78 against the yen, off its prior lows of 1.2227 and 109.39, respectively. The greenback is seen finding resistance around 1.20 against the euro and 112.00 against the yen.
The greenback hit 2-day highs of 1.2088 against the loonie and 0.7726 against the aussie, after falling to 1.2056 and a 1-week low of 0.7773, respectively. The greenback is poised to challenge resistance around 1.22 against the loonie and 0.75 against the aussie.
The greenback reversed from its previous lows of 1.4164 against the pound and 0.7272 against the kiwi, gaining to a 6-day high of 1.4128 and a 5-day high of 0.7223, respectively. The next possible resistance for the greenback is seen around 1.37 against the pound and 0.70 against the kiwi.
The greenback edged up to 0.8985 against the franc, from a low of 0.8964 seen earlier in the session. If the greenback strengthens further, it is likely to test resistance around the 0.92 region.
Looking ahead, U.K. mortgage approvals and Eurozone PPI for April are due in the European session.
Canada building permits for April and Fed Beige book report are set for release in the New York session.