US Dollar scales higher as Federal Reserve to remain hawkish ahead

A bumper upside move has been recorded in the US Dollar as heightened oil prices are likely to share serious consequences ahead. Various economies were struggling to get on track after a year of stubborn inflation. And now higher oil prices are expected to weaken the efforts yet made to tame sticky inflation. This has supported the US Dollar as the Federal Reserve (Fed) would look for continuing its policy-tightening program to neutralize oil-inspired inflationary pressures. As per the CME Fedwatch tool, the odds for a 25bp rate hike to 5.00-5.25% for May monetary policy meeting have soared above 61%.

Going forward, the US ISM Manufacturing PMI data will keep investors busy. According to the consensus, the Manufacturing PMI is expected to decline marginally to 47.5 from the former release of 47.7. Investors should be aware that the US Manufacturing PMI has remained below 50.0 consecutively in the past four months.

From the US Manufacturing PMI gamut, New Orders Index would hog the limelight as it provides cues about the manufacturing outlook. The forward demand for the manufacturing sector is expected to contract significantly to 44.6 vs. the prior release of 47.00.