2024.02.0521:00:00UTC+00Dollar Rises Against Major Counterparts As Early Rate Cut Hopes Fade

The U.S. dollar climbed higher on Monday, gaining ground against is major counterparts, as prospects of an interest rate cut faded following recent upbeat economic data, and Fed Chair Jerome Powell's hawkish comments.

Data released by the Labor Department last week showed the U.S. economy added 353,000 jobs in January, much higher than expectations for an increase of about 180,000 jobs.

The Institute for Supply Management released a report on Monday showing U.S. service sector growth accelerated by more than expected in the month of January.

The ISM said its services PMI climbed to 53.4 in January from a downwardly revised 50.5 in December, with a reading above 50 indicating growth in the sector. Economists had expected the index to rise to 52.0 from the 50.6 originally reported for the previous month.

Fed Chair Jerome Powell reiterated during an interview on Sunday with "60 Minutes" that the central bank is unlikely to cut interest rates next month.

Powell suggested the strength of the U.S. economy even amidst elevated rates will allow the Fed to proceed carefully. "With the economy strong like that, we feel like we can approach the question of when to begin to reduce interest rates carefully," Powell said.

"We want to see more evidence that inflation is moving sustainably down to 2%," He added. "Our confidence is rising. We just want some more confidence before we take that very important step of beginning to cut interest rates."

According to CME Group's FedWatch Tool, the chances of a March rate cut have fallen to 16.5% now.

The dollar index climbed to 104.60 before easing to 104.48, still firmly up with a gain of about 0.53%.

Against the Euro, the dollar firmed to 1.0742, gaining from 1.0788. The dollar strengthened to 1.2535 against Pound Sterling. Against the Japanese currency, the dollar was up, fetching 148.69 yen a unit.

The dollar strengthened against the Aussie to 0.6483. Against Swiss franc, the dollar gained to CHF 0.8708, and against the Loonie, the greenback got stronger at C$1.3544.