The Dollar Index surged, breaking its longest stretch of weekly losses in more than five years, as concern the global economic recovery is stumbling curbed investors’ appetite for higher-yielding assets.
The US currency rose against all 16 of its most-traded counterparts as data from Europe, China and the US fueled demand for safety. The euro fell against most major currencies, while the yen touched a 15-year high versus the US dollar after the US Federal Reserve said the recovery would be “more modest.” US producer prices rose last month, a report next week may show.
The US dollar strengthened 4.1 percent, the most since May, to US$1.2754 per euro on Friday in New York, from US$1.3280 the previous Friday.
The Dollar Index, which IntercontinentalExchange Inc uses to track the greenback against the currencies of six major trading partners, rose 3.1 percent to 82.920. It fell for the past nine weeks, the longest losing period since the 11 weeks ended Dec. 3, 2004.
Sales at US retailers rose last month less than forecast and core consumer prices grew at a rate that matched the smallest year-on-year gain in 44 years, government reports showed.
Sales at US retailers increased 0.4 percent, Commerce Department data showed, compared with a 0.5 percent gain forecast in a Bloomberg News survey. Consumer prices, excluding food and energy, increased 0.9 percent last month from the year before, matching the smallest year-on-year gain since 1966, the US Labor Department reported.
The euro fell below its 100-day moving average of US$1.2809 on Thursday. It touched US$1.2750 yesterday, the lowest level since July 22.
The yen has risen 13 percent this year, the most among 10 developed-world currencies, according to Bloomberg Correlation-Weighted Currency Indices. Its rally has fueled speculation the government may intervene to curb its appreciation.
The British pound dropped for the first week since July 9 after the Bank of England said UK economic growth would probably peak at a 3 percent instead of the 3.6 percent rate forecast in May. Sterling lost 2.2 percent to US$1.5592, from US$1.5942 in the five-day period ended Aug. 6.
Funds based abroad sold more shares this week than they bought in South Korea and Taiwan, driving this year’s net inflows to the two markets below the US$10 billion mark.
The New Taiwan dollar lost 0.6 percent to NT$31.960 against the US currency this week, Indonesia’s rupiah fell 0.4 percent to 8,975 and the Philippine peso slipped 1 percent to 45.305.
The New Taiwan dollar fell on signs demand is weakening in the nation’s biggest export markets.
“If the US and China economies slow, it’ll cripple Asia’s recovery,” said Tarsicio Tong, a currency trader at Union Bank of Taiwan in Taipei. “Money is going into safer assets like government bonds at the moment.”
The New Taiwan dollar earlier touched a two-week low of NT$32.102.
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