There is no stopping the US dollar.
The greenback is stampeding toward its strongest in at least a decade as traders re-establish bets on US policy divergence from global stimulus. Commodity currencies are in the line of fire as New Zealand’s central bank meets on July 22 to weigh further easing after its Canadian counterpart cut rates this week.
“There’s more upside to the dollar,” said Omer Esiner, chief market analyst at the currency brokerage Commonwealth Foreign Exchange Inc in Washington. “There may be a bigger reaction when the rate hike actually comes than what the market is thinking.”
Photo: AP
The Bloomberg Dollar Spot Index, which tracks the US currency versus 10 major peers, rose for a fourth week, adding 1.6 percent to 1,208.00, a three-month high. The measure is 1.2 percent below a 10-year high touched in March.
The greenback climbed 3 percent from a week earlier, the biggest move in eight weeks, to US$1.0830 per euro. It rose 1.1 percent versus the yen, the first gain in three weeks.
The dollar advanced versus 14 of its 16 major peers this week after US Federal Reserve Chair Janet Yellen indicated policymakers would look to raise interest rates by year-end.
The US central bank is weighing incoming data for signs the economy can withstand the first rate increase since 2006.
“If the economy evolves as we expect, economic conditions likely would make it appropriate at some point this year to raise the federal funds rate target,” Yellen said in testimony before the US Congress.
Yellen’s comments helped the dollar gain against the euro as the European Central Bank on July 16 maintained its program of quantitative easing. The prospect of higher US rates boosted the dollar to multiyear highs versus currencies from Canada to Australia and New Zealand.
The Canadian dollar slumped beyond C$1.30 for the first time since March 2009 after the Bank of Canada lowered its interest-rate target to 0.5 percent, the second reduction this year. Policymakers are trying to boost an economy struggling as the price of crude oil, the nation’s top export, fell for a third straight week, the longest streak since March, and is down 51 percent in the past year.
Net bullish bets for the dollar to strengthen against eight major counterparts by hedge funds and money managers rose, according to Commodity Futures Trading Commission data. Futures positions betting on a stronger greenback were at 342,909 contracts as of July 14, the most in five weeks.
The US dollar mostly weakened against other Asia-Pacific currencies on Friday.
While it rose to NT$31.312 from NT$31.09, it slipped to 1,146.93 won from 1,149.59 won on Thursday, to S$1.3666 from S$1.3681, to 63.48 Indian rupees from 63.50 rupees and to 13,343 Indonesian rupiah from 13,361 rupiah.
The US unit was also lower at 45.15 Philippine pesos against 45.26 pesos and 34.18 Thai baht from 34.22 baht.
The Australian dollar bought US$0.7417 from US$0.7359.
Bank of England Governor Mark Carney has spent the week preparing UK investors for higher interest rates, pushing the British pound to its best performance versus the euro in more than six years.
Sterling touched the strongest level since 2007 against the shared currency on Friday after Carney said a day earlier that the end of record-low interest rates is in sight and the time for such a move will become much clearer by the end of the year. The pound appreciated 0.4 percent to ￡69.40 per euro as of 4:13pm London time and touched ￡0.6937, the strongest since November 2007. It has climbed 3.6 percent this week, the biggest gain since January 2009. Sterling rose 0.2 percent against the US dollar to US$1.5635.
Additional reporting by AFP
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