The US dollar rose the most since August against the currencies of major trading partners as reports showed services industries expanded last month at the fastest pace in four years and employers added jobs for a third month.
Mexico’s peso and Canada’s dollar were the top performers this week against the yen as investors became more confident in the North American recovery before a report next week on US retail sales. The euro fell to a three-month low against the US dollar as the Swiss National Bank said it won’t accept bonds from Ireland’s government and some Irish banks as collateral.
“The US economy is on much sounder footing going forward, which means the dollar is a more attractive currency, especially versus Europe,” said Richard Franulovich, a senior currency strategist at Westpac Banking Corp in New York. “For a lot of people, you’ve reached an important milestone where finally the dollar can benefit from good data.”
IntercontinentalExchange Inc’s Dollar Index, which tracks the greenback against the currencies of six major US trading partners including the euro and yen, increased 2.7 percent to 81.129 on Friday, from 79.028 on Dec. 31.
The index’s weekly rally is the biggest since an advance of 3.2 percent during the five days ended Aug. 13. That week the Federal Reserve said the economic recovery will be “more modest,” spurring demand for the dollar’s safety.
The euro fell 3.6 percent to US$1.2907, from US$1.3384 last week, in its biggest weekly drop since August. It touched US$1.2905, the lowest level since Sept. 14. The US dollar gained 2.5 percent to ￥83.15 in the biggest increase since it rose 4.7 percent during the week ended Dec. 4, 2009.
The pound posted its biggest gain versus the euro since January 2009 as investors speculated the UK economy will recover faster than the nations that use the common currency.
Sterling appreciated to its strongest level versus the euro in almost four months and declined against the US dollar.
The pound strengthened 3 percent to ￡0.8319 pence per euro, as of 6:07pm in London on Friday, its strongest level since Sept. 13, and the biggest one-week advance since the week ending Jan. 30, 2009. Against the US dollar, the British currency was at US$1.5540 from US$1.5612 a week ago.
Sterling strengthened 1.8 percent in the week, according to Bloomberg Correlation-Weighted Currency Indexes, which track a basket of 10 developed-country currencies.
Asian currencies had their biggest weekly loss in more than a month, led by the Indian rupee and the Thai baht, as further signs the US economic recovery is on track bolstered demand for the greenback.
China’s yuan had its steepest five-day decline since December 2008 as data on US service industries beat economist’s forecasts in a Bloomberg survey. South Korea’s won and Malaysia’s ringgit weakened on speculation that regional policy makers will take measures to curb gains in their currencies to protect exporters. Lingering concern over Europe’s debt crisis also pushed Asian currencies lower, according to Credit Agricole CIB.
The New Taiwan dollar on Friday closed below NT$30 for the first time since October 1997, suggesting the central bank may tolerate faster appreciation. The NT dollar was 1 percent stronger on Friday and advanced 1.9 percent for the week to NT$29.80 against its US counterpart.
The rupee slumped 1.5 percent from a week ago to 45.39 and the baht fell 1.4 percent to 30.41, its biggest five-day decline since February 2009, according to data compiled by Bloomberg. The yuan retreated 0.59 percent to 6.6291.
Elsewhere, the Singapore dollar weakened 1.2 percent this week to S$1.2979 and the Philippine peso slid 0.8 percent to 44.155. The Indonesian rupiah declined 0.6 percent to 9,028.
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