Sun, Nov 24, 2019 - Page 14 News List

Upbeat data boost US dollar, trade uncertainty lingers

Reuters, NEW YORK

The US dollar on Friday shook off early weakness to advance against a basket of currencies, after data showed US factory and services activity quickened this month in a sign of the continued resilience of the US economy.

IHS Markit Ltd said its “flash” purchasing managers’ index (PMI) for manufacturing rose to 52.2 this month from a final reading of 51.3 last month, while its preliminary services PMI increased to 51.6 from 50.6.

The US dollar index, which compares the greenback with six major currencies, was up 0.24 percent at 98.23.

Helping the US dollar’s strength was a survey that showed eurozone business growth almost ground to a halt this month as activity in the bloc’s dominant services industry increased at a much weaker pace than expected and contracted again among manufacturers.

The common currency fell 0.28 percent against the greenback.

“That combination is what is pulling the dollar a little higher,” said Vassili Serebriakov, an FX strategist at UBS Group AG in New York.

Despite the rise on Friday, the US dollar has remained largely range-bound over the past few sessions. For the week, the dollar index rose 0.24 percent.

Mixed messages on the US-China trade deal this week kept investors from taking on any large directional positions ahead of next week’s Thanksgiving holiday.

Chinese President Xi Jinping (習近平) said that Beijing wants to work out a deal with Washington and has been trying to avoid a trade war, but is not afraid to retaliate when necessary.

A senior Chinese diplomat urged the US to compromise to develop stable relations between the countries, saying that some US politicians were trying to push the countries into confrontation.

Meanwhile, volatility in the currency market has plunged in the past few days with the Deutsche Bank FX Volatility Index slipping to 5.86, its lowest since mid-July.

“The dollar is relatively expensive, but I think the market is really looking for signs of a stronger global growth rebound to revive interest in some of the currencies outside of the US, but the messages that we are getting are still a bit mixed, both in terms of the PMIs and the news on trade,” Serebriakov said.

Elsewhere, the pound dived on Friday after surveys showed British business suffered its worst downturn since mid-2016, with caution rising before a Dec. 12 general election. The pound was 0.6 percent lower at US$1.2832, posting a weekly loss of 0.54 percent.

In Taipei, the New Taiwan dollar rose against the US dollar, gaining NT$0.007 to close at NT$30.517, up 0.07 percent from last week’s NT$30.538.

Additional reporting by staff writer

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