The US dollar rose with global stocks, oil and metals this week after China cut interest rates, while the euro weakened as European Central Bank (ECB) president Mario Draghi said the financial authority must drive inflation higher.
The Bloomberg Dollar Spot Index hit a five-year high at 4pm on Friday in New York, as the euro fell the most in a year versus the yen.
China cut benchmark interest rates for the first time since July 2012, stepping up efforts to support the world’s second-largest economy. The move put the People’s Bank of China on the side of the ECB and the Bank of Japan in adding stimulus. Draghi on Friday said the ECB needs to accelerate inflation and may broaden its asset purchases.
“Asia is strong on the interest rates and Europe is strong on the Draghi comments,” said Michael James, managing director of equity trading at Wedbush Securities Inc.
The advance in global shares pushed the MSCI All-Country World Index’s gain this week to 1.1 percent, the most since last month.
The euro fell 1.2 percent to US$1.2388 after Draghi’s speech, while the Bloomberg Dollar Spot Index gained 0.3 percent to the highest since March 2009.
The yen added 0.4 percent to ¥117.72 per US dollar on Friday and jumped 1.6 percent to 145.89 per euro.
In London, a second electoral victory for the UK Independence Party (UKIP) is putting the pound in the crosshairs, with a general election due in less than seven months.
Sterling fell against most of its 16 major peers on Friday after the anti-EU party won a by-election forced by the defection of ruling Conservative Party member of parliament.
Amid speculation that UKIP’s growing support will influence policy on Britain’s ties with its biggest trading partner, Standard & Poor’s head of sovereign ratings Moritz Kraemer said membership of the EU is an “integral” part of the company’s assessment of Britain, while Societe Generale SA said sterling may plunge as much as 10 percent if the UK leaves the 28-nation bloc.
The pound fell 0.1 percent to US$1.5680 on Friday and dropped 0.7 percent to ¥184.30.
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
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