The US dollar rose on Friday, hitting a 10-week high against the yen, as risk appetite improved amid a more upbeat outlook on some major economies of the world and the prospect of a trade deal between China and the US.
The US dollar index, a gauge of the currency’s value against six major currencies, on Friday rose 0.4 percent, posting its largest daily percentage gain in two weeks.
“Looking at the whole G10 space, there has been more follow-through from US-China trade optimism that was already in the process of getting priced in during the month of February,” BMO Capital Markets European foreign exchange strategy head Stephen Gallo said in London.
“Meanwhile, one of the biggest boosts to the US dollar is coming from a weak yen,” he added.
Friday’s slew of weaker-than-expected US economic data weighed on the dollar initially, especially the manufacturing index, but the greenback rallied to trade higher on the day.
In afternoon trading, the dollar index rose 0.4 percent to 96.307. For last month, the dollar index was up 0.4 percent.
The dollar was also supported by data on Thursday showing that US GDP grew at an annual 2.6 percent rate in the fourth quarter of last year, exceeding forecasts for a 2.3 percent gain.
Benchmark 10-year US Treasury yields have risen nearly 10 basis points this week, the highest weekly increase in four months. The yield on Friday surged to 2.759 percent, a four-week high.
The dollar was up 0.5 percent against the yen at ¥111.93 after hitting a 10-week peak, its best daily increase since Feb. 11.
Sterling was also down 0.5 percent versus the dollar at US$1.3193, its largest percentage decrease in roughly three weeks.
Meanwhile, the euro slipped 0.1 percent against the greenback at US$1.1356.
Earlier data showed that underlying inflation in the eurozone remained subdued.
The single currency rose earlier versus the dollar after news that a US manufacturing index had fallen last month to its lowest since November 2016.
The Institute for Supply Management’s US manufacturing index last month fell from 56.6 in January to 54.2.
The prices paid index, a measure of inflation, also fell, to 49.4, the weakest since February 2016.
Other economic data were also soft, with a weaker-than-expected University of Michigan consumer sentiment index for last month, as well as a drop in US personal income and spending.
The reports underscored expectations for weaker growth momentum in the first quarter.
“All of these things are putting a damper on the dollar. The market was looking for a stronger recovery after the shutdown,” FXstreet.com senior analyst Joe Trevisani said in New York, referring to a 35-day partial US government shutdown that ended on Jan. 25.
“It’s not a big collapse, but it’s not as strong as people thought,” he added.
The New Taiwan dollar gained NT$0.008 against the US dollar to close at NT$30.775 on Wednesday, the last day of trading in Taipei this week due to the four-day 228 Peace Memorial Day holiday. That was a 0.2 percent increase from a close of NT$30.822 on Feb. 22.
Additional reporting by staff writer
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