U.S.
growth drives dollar to 11th winning week
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[September 27, 2014]
By Michael Connor
NEW YORK, Sept 26 (Reuters - The dollar
posted an 11th straight week of gains against a basket of major
currencies on Friday, extending the longest winning streak since its
1971 free float under President Richard Nixon.
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The dollar index .DXY got extra lift from upwardly revised U.S.
gross domestic product data, adding 0.5 percent and hitting a fresh
four-year peak of 85.655 even as strategists and traders predicted a
pullback in the dollar rally.
A week ago, the basket of six currencies ended at 84.375 and had
been trading below 80 in early July.
The euro EUR=, which has fallen sharply against the dollar since May
as euro zone growth sputtered and U.S. prospects brightened, was off
0.55 percent against the dollar. It last traded at $1.2680, just off
a low of $1.2679 not seen in two years.
The Japanese yen JPY= set a new six-year low against the dollar,
while the Swiss franc CHF= and sterling GBP= were also down sharply.
Currency rallies rarely run uninterrupted, with just a handful
having lasted beyond eight weeks since the 1970s, according to
currencies strategist Martin Schwerdtfeger at TD Securities in
Toronto.
"Given the impressive rally in the dollar we have seen over the last
2-1/2 months, we wouldn't be surprised if we see a little bit of a
pause," Schwerdtfeger said. "That doesn't mean we will have any
significant retracement."
A growing divergence of market interest rates on either side of the
Atlantic also favors the dollar. Its gains on Friday widened after
the U.S. Commerce Department reported the U.S. economy grew at its
strongest rate in 2-1/2 years during April, May and June.
Department economists raised GDP estimates to show the economy
expanded at a 4.6 percent annual rate during the second quarter, the
strongest performance since the fourth quarter of 2011.
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The data reflected a faster pace of business spending and sturdier
export growth than previously estimated, providing a firmer base for
third-quarter growth.
"This should help soothe some investor worries that U.S. growth
momentum would have trouble being sustained, as other major
economies remain stuck in the mud," Gennadiy Goldberg, U.S.
strategist for TD Securities in New York, told clients.
The dollar rose 0.7 percent to 109.43 yen JPY= after slipping as low
as 108.47 and briefly touching a six-year high of 109.52 yen.
(Additional reporting by Shinichi Saoshiro and Hideyuki Sano in
Tokyo; Editing by Catherine Evans)
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