The US dollar rose for a third day against major currencies on Friday, reaching a new high for the year against the euro, lifted by another positive report about the US economy.
The dollar's rise drove the euro down to US$1.2620 from US$1.2694 late Thursday in New York. That's the lowest the euro has been against the dollar since mid-October.
Traders bid up the dollar after the US Commerce Department said US business inventories rose 0.4 percent in March as total sales accelerated sharply after a lull in February.
The dollar has rallied over the last three days on a string of better-than-expected US economic reports, easing concerns about a slowdown in the world's largest economy.
Thursday's report showing US retail sales rose 1.4 percent in April, the biggest rise in six months, followed Wednesday's release of a smaller-than-expected US trade deficit.
The dollar rose to ?107.37 from ?106.78. Better-than-expected Japanese machinery orders failed to stem the dollar's gains. The British pound fell to US$1.8501 from US$1.8650 on Thursday.
Although there is growing optimism that the weeks' economic reports could spell the end of a soft patch in the US economy, a lack of enthusiasm for US stocks and treasuries could undermine the dollar in coming days, traders say.
"The key question for markets is whether this is a signal of a potentially bigger move in the dollar or just a minor correction," said Steven Englander, chief currency strategist at Barclays Capital in New York, told Dow Jones Newswires.
Also on Friday, for the second time in a week, China denied a report that it plans to change the value of its politically sensitive currency, the yuan.
In comments apparently aimed at discouraging more speculative pressure on the yuan, central bank Governor Zhou Xiaochuan (
The yuan has been set at about 8.28 per US dollar since 1994. The United States and other trading partners complain that the yuan is undervalued by as much as 40 percent, giving Chinese exporters an unfair advantage over their competitors. Most traders say if China adopts a more flexible currency system, the yuan would appreciate against the dollar -- and probably also lift the yen against the dollar due to the close trade and regional ties between Japan and China.