USD Maintains Gains Below Three-Month Highs

The U.S. Dollar hit a three-month high on Thursday, with markets reacting positively to recent economic data and anticipating the release of Friday’s nonfarm payrolls report.

The Dollar index (DXY), which measures the greenback’s performance against a basket of six major international currencies, rose above 92.60 for the first time since April, before settling near 92.597, rising by about 0.2% for the day.

In June, DXY recorded its best monthly performance since November 2016, following the Fed’s surprising hawkish change in tone, with two rate hikes expected before the end of 2023.

Employment data has become the focus of investors’ attention, as an early indicator of the monetary policy adjustments by the Federal Reserve, which is expected to begin tapering asset purchases soon.

Meanwhile, the USD gave up some of its earlier gains with investors reacting to the slowing growth in the manufacturing sector, as shown by the most recent PMI reading.

The Dollar’s gains against the Euro (EUR) were marginal at 0.05%, while its performance against the Sterling Pound (GBP) was better as it gained about 0.50%.

Meanwhile, against the Japanese Yen, the USD added 0.38% as it settled at 111.53, after the USD/JPY pair hit its highest level in about 15 months earlier today at 111.640.