The US dollar climbed as economic reports from the US to Germany and China underlined the relative strength of the US economy versus the rest of the world.
The greenback advanced to a four-month high as a US manufacturing gauge rose, supporting Federal Reserve moves toward higher interest rates. Commodity currencies tumbled, with the Brazilian real and Canada’s dollar touching the lowest in more than a decade, as a drop in a measure of Chinese factory output undercut metal prices.
“There’s been some positive signs in the US data,” said Vassili Serebriakov, a New York-based foreign-exchange strategist at BNP Paribas SA
“The sliding price of commodities also “creates a generally risk-off environment so the dollar benefits against those higher-risk currencies,” he said.
The Bloomberg Dollar Spot Index, which tracks the greenback versus 10 of its peers, added 0.2 percent to 1,209.47 at 5pm in New York, after touching 1212.78, its highest since March. The gauge rose for a fifth week, its longest streak of gains since December.
The Canadian dollar slid 0.1 percent to C$1.3049 after touching C$1.3103, its lowest since September 2004. Brazil’s real dropped 2.1 percent to 3.3551 per US dollar after touching 3.3567, the lowest since March 2003.
The US dollar rose versus most of its 16 major counterparts as a manufacturing purchasing managers’ index compiled by Markit Economics rose for the first time in four months. That contrasts with China, where a measure showed factory output contracted more than forecast by any of the 16 analysts surveyed by Bloomberg before the release.
Europe’s single currency weakened versus most of its 16 major peers after German manufacturing growth unexpectedly slowed this month and a gauge of euro-region factory output and services fell from a four-year high. The euro dropped 0.3 percent to US$1.0954 as of 9:22am in New York, cutting its weekly gain to 1.1 percent.
The euro pared a weekly advance against the US dollar as representatives of Greece’s three main non-private creditors — the so-called troika — returned to Athens to start negotiations for a third bailout.
“Greek woes are weighing at the margin, underlining fundamental differentials between the euro area and the US and UK,” said Jeremy Stretch, a strategist at Canadian Imperial Bank of Commerce in London.
Meanwhile, sterling fell the most since May against the euro as a report showed UK retail sales unexpectedly shrank last month, puncturing investors’ optimism about the strength of the economy and the scope for higher interest rates. Still, with data next week likely to show economic growth quickened in the second quarter, the case for higher borrowing costs may be boosted once again.
The pound depreciated 1.8 percent in the past week to £0.7075 per euro as of 5pm in London on Friday. It strengthened 3.6 percent the previous week. Sterling dropped 0.5 percent to US$1.5516.
A report on Tuesday is expected to show that the UK economy grew 0.7 percent in the second quarter, compared with 0.4 percent in the previous three months, according to the median estimate of analysts in a Bloomberg survey. The pound could strengthen toward £0.65 per euro in the next six months, said Simon Derrick, chief markets strategist at Bank of New York Mellon Corp in London.
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