The US dollar rallied on Monday, although gains were limited ahead of a deluge of economic data, as the markets absorbed the growing possibility of a Greek debt default.
The US dollar index, a trade-weighted average of the dollar against six currencies, rallied to 97.28 on Monday. It would subsequently consolidate at 97.05, a gain of 0.1%.
The dollar rallied against the euro, as the EUR/USD tumbled to a daily low of 1.0819. It would later consolidate at 1.0852, declining 0.1%.
Greece and its Eurozone partners resumed negotiations on Monday after Eurogroup talks broke down last week with both sides still far apart on a new bailout agreement. Greece is on the hook for €1.7 billion worth of public sector salaries and pensions at the end of the month and will reportedly run out of cash by mid-May. Greece will require tens of billions of euros by the end of June to avoid defaulting on crucial loan payments to the European Central Bank.
The US dollar also gained ground against the British pound, which is awaiting first quarter GDP data later in the week. The GBP/USD bottomed out at 1.5108 in the European session after trading as high as 1.5191. The pair subsequently consolidated at 1.5157, declining 0.15%.
On Tuesday the Office for National Statistics is expected to show that the UK economy accelerated 0.5% in the first quarter, slightly below the fourth quarter rate of 0.6%. Year-on-year, this translates into a gain of 2.6% compared to 3% in the fourth quarter.
In economic data, US services PMI weakened unexpectedly in April, although the overall picture continued to show signs of progress. Markit Economics’ flash services PMI fell 1.4 percentage point to 57.8 in April. Businesses reported a solid increase in overall activity and incoming new work, which contributed to the fastest rate of job creation since June 2014. This suggests the labour market had regained momentum after an abrupt slowdown in March that saw employers add just 126,000 payrolls. The Department of Commerce will report on April nonfarm payrolls at the end of next week.
The US economy is forecast to expand just 1 percent annually in the first quarter, Markit Economics said on Monday. GDP growth is expected to rebound in the second quarter, growing 3 percent annually.