The US Dollar Index (DXY) continued its upward momentum, trading near the 99.50 region after a stronger-than-expected ISM Services Purchasing Managers Index (PMI) reading for May. The ISM Services PMI rose to 54.5 in May from 53.6 in April, signaling resilience in the US economy and supporting higher Treasury yields. On Wednesday, the DXY reached its highest level since April 7, at 99.55 [1].
The US Dollar outperformed all major currencies, with the most significant gains against the New Zealand Dollar (+1.05%), Australian Dollar (+0.71%), and Canadian Dollar (+0.41%). Against the Euro and British Pound, the USD appreciated by 0.30% and 0.35%, respectively. The Japanese Yen also weakened slightly against the USD, with the USD/JPY pair trading at the 160.00 level [1].
EUR/USD remained under pressure near the 1.1600 area, while GBP/USD declined toward the 1.3420 region as the stronger Greenback weighed on both currencies. The Australian Dollar fell to a one-week low near 0.7130. Bank of Japan Governor Kazuo Ueda commented that policymakers must carefully consider the 'pros and cons' of a rate hike if inflation risks outweigh risks to economic growth [1].
In commodities, gold prices dropped 1% to the $4,440 area due to higher US Treasury yields and a firmer US Dollar, reducing demand for the non-yielding metal. Meanwhile, West Texas Intermediate (WTI) Oil gained nearly 3% to retake the $96.00 area as traders balanced expectations for resilient global demand against concerns about future supply conditions [1].
CONCLUSION
The US Dollar's strength, driven by robust ISM Services PMI data, exerted broad pressure on major currencies and contributed to declines in gold prices. Market sentiment remains positive for the USD, with traders closely watching upcoming economic data for further direction.