The dollar rose against the euro, posting a second weekly gain, after stronger-than-expected reports on US factory orders and manufacturing suggested the world's biggest economy is close to a recovery.
"You've seen the dollar streng-then across the board as there's a more positive tone from the reports," said Karl Halligan, chief trader at the New York branch of CIC Bank, France's No. 5 bank. "This might be exactly what the markets are looking for" to help boost stocks and the currency.
The dollar climbed to US$0.9116 per euro from US$0.9161 yesterday. It had fallen as far as 92 earlier on anticipation the reports would show the US economy remains weak. Japan's currency rose to a three-month high against the dollar at ?118.57 from ?119.40 yesterday, before falling back to ?118.82.
The US currency is still down 5 percent against the yen and 3.8 percent against the euro this month.
As the US economy shows signs of picking up, Europe's economy may be slowing further. Europe's 12-nation currency began its decline today after figures showed French jobless ranks grew at the fastest pace in more than five years in July while Italian and Spanish factories cut prices.
US factory orders rose 0.1 percent in July after declining 2.9 percent in June, the government said. Economists had forecast a 0.5 percent drop. The National Association of Purchasing Management-Chicago said its monthly index of regional manufacturing rose to 43.5 this month from 38 in July. Economists had forecast a reading of 40.
US stocks rose after the reports, halting four days of losses and boosting demand for dollars as investors moved money into the country to purchase shares, analysts said.
"The dollar gained on stronger equities after sentiment had been very negative all week," Halligan said.
Friday's statistics could signal the US economy is starting to rebound from its worst 12 months since the 1990-1991 recession, analysts said. The Federal Reserve has cut its benchmark lending rate seven times this year.
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