The US dollar traded near a seven-month high against the euro in London on expectations that reports this week will show the US economy grew faster last quarter than first estimated and durable-goods orders rebounded last month.
The pace of US economic expansion and speculation the Federal Reserve will keep raising interest rates have boosted the dollar against 12 of its 16 major counterparts this year. The currency is poised for a fifth weekly gain versus the euro, the longest winning streak since 2000, according to a Bloomberg survey published yesterday.
"We've still got the interest rate argument and good growth story supporting the dollar," said Daragh Maher, a currency strategist in London at Calyon, the investment-banking unit of Credit Agricole SA. "We should have an upward bounce in the durable-goods orders number, and an upward revision to the GDP number."
Against the euro, the dollar was at US$1.2553 at 9:26am in London, from US$1.2557 late on Friday in New York, according to electronic foreign-exchange dealing system EBS. It traded as high as US$1.2535, the strongest since Nov. 20. The US currency was also at 108.06 yen from 108.16.
The euro was little changed since German Chancellor Gerhard Schroeder said he will seek an early national election that opinion polls suggest he will lose. The currency shared by a dozen EU nations may lose support after a poll yesterday showed a majority of French voters will reject the EU constitution in a referendum on Sunday.
Fifty-nine percent of the 54 strategists, investors and traders polled on Friday from Sydney to New York advised buying the dollar against the euro. Thirty-seven percent said the dollar will rise versus the yen.
"The US dollar is powering ahead," said David Mozina, a currency strategist in Sydney at ABN Amro Holding NV. "The Fed is the only major bank in the midst of a tightening cycle, and the growth divergence is apparent between the US and other major economies."
Durable-goods orders rose 1.3 percent last month, after falling 2.8 percent in March, based on the median estimate of 51 economists surveyed by Bloomberg News. The Commerce Department will release the report tomorrow.
The US economy probably expanded at a 3.6 percent annual rate from January through March, faster than the 3.1 percent pace reported last month, according to a different poll ahead of the department's Thursday release.
The Fed has increased rates eight straight times in the past year, bringing its benchmark to 3 percent, above the European Central Bank's comparable target of 2 percent. The Bank of Japan on Friday left borrowing costs at virtually zero.
"The Fed will continue to tighten this year," said Marc Faber, managing director of Marc Faber Ltd, with about US$300 million of assets. "We are now long US dollars."
Support for the euro is waning amid concern voters will reject the EU constitution in votes in France on Sunday and in the Netherlands on June 1. Opposition in France is at 53 percent, according to a May 20 survey by polling company BVA. Twice as many Dutch say they will reject as those who will support it, a poll by TNS NIPO showed the same day.
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