The US dollar climbed to the highest in more than a month after data showed US retail sales last month increased by the most in a year, reigniting speculation the US Federal Reserve might raise interest rates this year.
The US dollar rose for a second week as consumer purchases jumped the most in a year, indicating retail spending would help the economy recover from an early-year slowdown. Another report showed US consumer confidence in the jumped this month to the highest level in almost a year. Bloomberg Dollar Spot Index exceeded its 50-day moving average for the first time since February.
“The dollar has been on a nice run,” said Jennifer Vail, head of fixed-income research in Portland, Oregon at US Bank Wealth Management. “It’s a direct reflection of comfort in the sustainability of domestic economic growth.”
The US currency extended its rebound from an almost one-year low reached earlier this month, with signs of stronger economic performance adding to evidence that may convince the central bank to tighten policy. That bolsters the relative allure of the US dollar as policy makers in Europe and Japan are forecast to expand monetary stimulus.
The Bloomberg Dollar Spot Index, which tracks the currency versus 10 major peers, rose 0.5 percent as of 5pm in New York, touching the strongest level on an closing basis since March 28.
The index posted a 0.9 percent weekly gain after touching 1,150.22 on May 3, the lowest level since May last year. The greenback gained 0.8 percent to US$1.1309 per euro and added 1.4 percent to ￥108.63.
In Taipei, the US dollar rose against the New Taiwan dollar on Friday, gaining NT$0.084 to close at NT$32.626 after foreign investors continued to move funds out of the country, dealers said. The US unit also closed higher from NT$32.412 on Friday last week.
The weakness of other regional currencies gave an additional boost to the US dollar, while heavy foreign institutional selling in the local equity market added downward pressure on the NT dollar, they said.
The gains posted by the US dollar lifted the currency to a high not seen since March 29, when the unit closed at NT$32.695.
In the UK, the pound declined 0.4 percent this week to US$1.4372 as of 5pm in London on Friday, after dropping 1.3 percent in the five days through May 6. Sterling strengthened for the first time in three weeks versus the euro, gaining 0.6 percent to ￡0.7860.
Sterling has been hurt as signs of an economic slowdown have prompted some investors to speculate that the next move in UK interest rates might be lower rather than higher, even as they remain in the minority.
Bank of England policymakers led by Governor Mark Carney on Thursday said the June 23 referendum on Britain exiting the EU might account for about half of the 9 percent fall in the pound’s trade-weighted rate in the past six months.
Carney said the UK economy could slip into recession should Britain vote to leave the EU.
Additional reporting by staff writer, with CNA
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