The Dollar rose on Monday, as weak euro zone data took the steam out of last week's Euro rally and investors braced for a Federal Reserve statement this week that will likely focus on rising US inflation pressures. The Fed's inflation mindset when it announces its monetary policy decision on Wednesday should ensure that US interest rates will remain unchanged after a string of cuts since mid-September, analysts said.
Monday reports showed high energy costs had soured German business sentiment and the euro zone's manufacturing and service sectors contracted in June, denting the case for higher euro zone interest rates and punishing the Euro across the board.
The Fed is expected to hold rates at 2% on Wednesday but the futures markets have priced in a pair of rate hikes by year end due to surging energy and food price inflation. Unlike the Fed, the European Central Bank has signaled a rate hike in July, though officials have been at pains to make clear that this would not necessarily lead to a series of hikes.
EurUsd fell 0.53% at 1.5522, its largest daily loss in about two weeks. UsdChf rose 0.92% to 1.0452. UsdJpy rose 0.5% to 107.88, boosted after a Japanese government survey of large manufacturers showed sentiment deteriorated in the second quarter. GbpUsd fell 0.58% to 1.9645. The Dollar has gained despite firmer commodities on Monday. US crude futures were up more 1% at $137.36 on Nigerian supply disruptions and escalating tensions between Israel and Iran. Gold fell 1.94% at 883.35 extending last week sell-off as investors took more profits on the back of a rebounding Dollar.