NEW YORK: The US dollar edged up to a fresh 16-month high against a basket of key currencies on Wednesday on the back of continued US economic strength.
The dollar index, a gauge of its value versus six major peers, rose 0.08 percent to 97.09, its highest since June 2017.
"If you look at the G10 as well as some of the emerging markets, they have been battered quite a bit over the last six months and the movements over the past two, three weeks has not helped," said Minh Trang, senior FX trader at Silicon Valley Bank in Santa Clara, California.
"Especially if you look at currencies like the euro or the pound," Trang added.
The euro slipped 0.24 percent against the greenback on Wednesday. For the month, the common currency was down about 2.5 percent, its worst monthly performance in five months.
Less-than-stellar economic news from the euro zone region has weighed on the euro.
The dollar, meanwhile, has enjoyed a boost from robust economic reports, including data last week which showed the US economy slowed less than expected in the third quarter.
The ADP national employment report on Wednesday showed that US private sector payrolls increased by the most in eight months in October, suggesting overall job growth accelerated this month after Hurricane Florence weighed on restaurant and retail employment in September.
The US Federal Reserve increased interest rates in September for the third time this year and is expected to raise rates again in December, even as the European Central Bank's plan to raise rates late next year may be challenged by alarmingly slow growth in the euro zone region.
"There seems to be a little bit of a disconnect between how the US has really fared over the last two years and what's going on outside," Trang said.
Part of the discord may have to do with the trade-related tensions, Trang said. Investors view the United States to be in better shape than its trading rivals to weather a trade war.
Meanwhile, sterling has been buffeted in recent months by Brexit-related headlines. On Wednesday, sterling rallied on after Britain's Brexit Secretary said a divorce deal with the European Union could be reached by the end of November.
The pound was up 0.53 percent against the dollar on Wednesday.
The dollar was little changed against the Japanese yen after the Bank of Japan kept monetary policy steady on Wednesday, reinforcing views that the central bank is in no rush to trim its massive stimulus.
The Canadian dollar edged lower against its US counterpart on Wednesday as the greenback broadly climbed, offsetting data that showed a surprise strengthening of the domestic economy in August.
Comments
Comments are closed.