The dollar rose to a one-year high against a basket of currencies on Thursday, gaining for a third straight session, as investors further boosted long-term bets on the currency following bullish comments this week on the US economy by Federal Reserve Chairman Jerome Powell. The greenback also climbed to a one-year peak against the yuan, as trade worries and reports Beijing would boost liquidity in the financial system pressured the Chinese currency.
The People's Bank of China is channeling credit to small and medium-sized firms as the country looks set to loosen monetary conditions to lessen the impact of a US-China trade war. Easier monetary policy tends to weaken a currency. In late morning trading, the dollar index, a gauge of its value against a basket of six major currencies, was up 0.37 percent to 95.432, after touching a one-year high at 95.652.
The dollar was up as lower-than-expected jobless claims bolstered rate hike expectations after two days of upbeat comments on the US economy by the Federal Reserve's chairman. On Tuesday and Wednesday, Powell said in congressional testimony he believed the United States was on course for years more of steady growth, and he carefully played down the risks to the US economy of an escalating trade conflict.
The widening interest rate gap between the United States and other major markets has lifted the dollar and prompted analysts to expect further strengthening. "If you look at the US, we're just outpacing everyone in terms of rate hikes," said Minh Trang, senior FX trader, Silicon Valley Bank in Santa Clara, California.
The dollar gained against the euro, with the single currency sinking 0.3 percent to $1.1600. Against the Japanese yen, the dollar rose 0.1 percent to 112.94 yen.
The Chinese yuan fell 0.8 percent to 6.798 yuan per dollar in offshore trading.
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