The US dollar climbed the most since September against the euro as investors sought refuge after US job growth fell short of forecasts and the European Central Bank (ECB) said the region’s economy still faces risks.
The shared currency touched a two-year low versus the US dollar amid concern an ECB cut in interest rates to a record low would not be enough to stem the euro bloc’s debt crisis. The greenback’s advance was tempered by speculation the US Federal Reserve might take further steps to boost growth, including a third round of debt purchases under quantitative easing. The US central bank opens a two-day policy meeting on July 31.
“The market has a risk-off tone,” Mary Nicola, a currency strategist at BNP Paribas SA in New York, said yesterday in a telephone interview. “The data this week has been very disappointing. It shows that there are some dimming prospects to growth, to the point that the idea of QE3 [third round of quantitative easing] might come into play next week.”
The US dollar rallied 3.1 percent to US$1.2291 per euro yesterday in New York, from US$1.2667 on June 29. The jump was its biggest since the five days ended Sept. 9. It touched US$1.2260, the strongest level since July 2010. The 17-nation currency depreciated 3.1 percent to ￥97.89 in the pair’s largest weekly drop since April 6. The Japanese currency rose 0.2 percent to ￥79.66 per dollar.
The Dollar Index, which Intercontinental Exchange Inc uses to track the greenback against the currencies of six major US trade partners, including the euro and the yen, advanced 2 percent, the most since December, to 83.285. It touched 83.431, the highest level since June 1.
The yen gained against all of its 16 most-traded counterparts this week except South Korea’s won. The euro fell against all of its major peers except the Danish krone.
Currencies of commodity-exporting nations fell against the US dollar and the yen as risk appetite ebbed. South Africa’s rand weakened 1.2 percent, the most in a month, to 8.2591 per dollar.
The pound rose 1.6 percent last week to ￡0.7933 per euro on Friday, the strongest level since November 2008. Sterling fell 1.5 percent to US$1.5478.