RTTNews - The dollar strengthened versus other major currencies Monday morning in New York amid speculation that the Federal Reserve may be compelled to raise interest rates sooner than previously expected in order to control potentially spiraling prices.
However, analysts note a move by the Fed to raise interest rates during a time of unemployment would be highly unusual. Election results in Europe, where many incumbents were swept out of office in a general move to the political right, helped to bolster the dollar, which rebounded late last week after seeing steep losses over the previous month.
The dollar jumped to an 11-day high versus the euro Monday morning, rising to 1.3804. With the advance, the dollar moved away from a 5-month low of 1.4338, set a week ago. A move to 1.3792 would bring the dollar to its highest level since May 21.
Officials said German factory orders stayed flat in April on a monthly basis, compared to March's revised growth of 3.7%. Domestic orders were up 0.6%, while foreign orders slipped 0.5%.
Meanwhile, the buck continued to firm up versus the sterling, climbing to 1.5801 after hitting a 6-month low of 1.6652 last week.
Many of Europe's left-leaning ruling parties had a rough go of it at the polls, while in Germany Angela Merkel's Christian Democrats enjoyed a resounding victory, and in France Nicolas Sarkozy's UMP party defeated opposition socialists. In the UK, Gordon Brown's Labour Party suffered a dismal result, putting his leadership in jeopardy.
The buck consolidated its gains from last week versus the yen, staying near Friday's 4-week high of 98.87.
The current account in Japan came in at an unadjusted surplus of 630 billion yen in April, the Ministry of Finance said in a preliminary report on Monday - down 54.5 percent on year and falling for the 14th consecutive month.
That was sharply lower than the 850 billion yen surplus that analysts had been expecting, easing from 1.485 trillion yen in March.
There are no major economic reports due out from the US on Monday. The Commerce Department is due to release its wholesale inventories report at 10 AM ET on Tuesday. Economists expect wholesale inventories at the end of April to show a 1% decline.
For comments and feedback: contact email@example.com