Investing.com - The dollar was broadly higher a basket of other major currencies on Monday, as growing expectations for a U.S. rate hike in the coming months continued to support the greenback and as investors eyed upcoming data on U.S. manufacturing activity.
The dollar remained supported even after data showed that the U.S. economy contracted in the first quarter, as recent indications of a rebound in growth continued to fuel expectations for higher interest rates.
U.S. gross domestic product contracted at an annual rate of 0.7% in the first three months of the year, instead of the initial estimate of 0.2% growth the Commerce Department said. It was still better than economists’ forecast of a 1% contraction.
EUR/USD dropped 0.67% to 1.0917 as concerns over the prospect of a Greek debt default weighed.
Greece is due to make a €305 million payment to the International Monetary Fund on June 5.
Meanwhile, data on Monday showed that the euro zone manufacturing purchasing managers' index came in at 52.2, unchanged from March’s final reading and a 10-month high, but down slightly from the preliminary estimate of 52.3.
Weakness in the region’s core economies persisted, with France’s manufacturing sector still in decline and Germany registering only modest growth.
The pound was also lower, with GBP/USD sliding 0.44% to 1.5218 after the Markit U.K. manufacturing PMI ticked up to 52.0 in May from a downwardly revised 51.8 in April, but came in below forecasts of 52.5.
The data added to expectations that the Bank of England will leave interest rates on hold for longer.
Sterling also remained under pressure amid renewed concerns over a possible British exit from the European Union.
Prime Minister David Cameron’s government introduced a law in parliament on Thursday to ensure a U.K. referendum on EU membership will be held by the end of 2017.
The greenback was fractionally lower against the yen, with USD/JPY down 0.09% to 124.05 but higher against the Swiss franc, with USD/CHF climbing 0.52% to 0.9470.
The Australian dollar slipped lower, with AUD/USD down 0.20% to 0.7632, while NZD/USD edged up 0.13% to trade at 0.7115.
USD/CAD rose 0.27% to 1.2488.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.58% at 97.50, not far from last week's five-week highs of 97.88.