The dollar index edged slightly higher to above 104 on Tuesday, holding close to levels not seen since mid-March, as traders try to assess the resilience of the US economy and the Fed’s next steps. Factory orders rose 0.4% in April, half the market forecasts and the ISM Services PMI fell sharply to the lowest in five months in May. Last week, the payrolls report painted a mixed scenario, with the economy adding a remarkable 339K jobs in May while the unemployment rate rose by 0.3 percentage points to 3.7% and hourly wage growth slowed. Around 75% of traders anticipate that the Fed will pause its tightening cycle this month, but there is a nearly 52% chance of another 25bps hike in July. Despite the general strenght, the greenback weakened against the Aussie, after the Reserve Bank of Australia delivered a surprise 25bps rate hike in borrowing costs.
