NEW YORK: The US dollar advanced against a basket of currencies on Friday as the latest batch of data on business activity from around the globe highlighted the superior position of the United States relative to other major economies.
S&P Global said its flash US Composite PMI index, which tracks the manufacturing and service sectors, dipped to a reading of 50.1 in September from a final reading for August of 50.2. September’s result was barely above the 50 level that separates expansion and contraction. Still, the US economy so far this year has defied projections for sliding into a recession that most economists had expected would be triggered by the Federal Reserve’s aggressive interest rate increases aimed at quelling inflation.
The data comes on the heels of disappointing data from Europe, which showed that economic activity in France fell much more quickly than expected in September.
Separate survey data covering the whole euro zone showed that the economy likely contracted in the third quarter.
“The US is continuing to outpace the rest of the world and I think it will continue to do so for some time,” Michael Brown, market analyst at Trader X, said of the US data.
“Unless we see a sustained pickup in growth in the rest of DM (developed markets), I struggle to take a bearish view on the buck over the medium-term, as the FX market’s focus increasingly shifts to which central bank will spend the longest time at its terminal rate,” Brown said.
The US dollar index - which measures the currency against six major counterparts - was 0.2% higher at 105.6 after having risen as high as 105.78 earlier in the session. That puts the index on pace for a weekly gain of about 0.3%, its 10th straight week of gains, its longest winning streak in nearly a decade.
The US central bank needs to raise interest rates further to control inflation in a “timely way,” Federal Reserve Governor Michelle Bowman said on Friday in remarks that sketched out a hawkish argument based on a potential rise in energy prices and a possibility the inflation battle may take years to complete.