The dollar climbed as economic reports from the U.S. to Germany and China underlined the relative strength of the American economy versus the rest of the world.
The greenback advanced to a four-month high as a U.S. manufacturing gauge rose, supporting Federal Reserve moves toward higher interest rates. Commodity currencies tumbled, with the Brazilian real and Canada’s dollar touching the lowest in more than a decade, as a drop in a measure of Chinese factory output undercut metal prices.
“There’s been some positive signs in the U.S. data,” said Vassili Serebriakov, a New York-based foreign-exchange strategist at BNP Paribas SA. The sliding price of commodities also “creates a generally risk-off environment so the dollar benefits against those higher-risk currencies.”
The Bloomberg Dollar Spot Index, which tracks the greenback versus 10 of its peers, added 0.2 percent to 1,209.47 at 5 p.m. in New York, after touching 1212.78, its highest since March. The gauge rose for a fifth week, its longest streak of gains since December.
The Canadian dollar weakened 0.1 percent to C$1.3049 after touching C$1.3103, its lowest since September 2004. Brazil’s real dropped 2.1 percent to 3.3551 per dollar after touching 3.3567, the lowest since March 2003.
The dollar rose versus most of its 16 major counterparts as a manufacturing purchasing managers’ index compiled by Markit Economics rose for the first time in four months.
Hedge funds and money managers increased net bets on the dollar to strengthen versus eight major counterparts to the highest since March, according to Commodity Futures Trading Commission data.
Reports on durable goods and gross domestic product may show further economic progress next week. Growth in GDP, which is forecast to expand at a 2.6 percent annual rate after declining in the first quarter, may help bolster the Fed’s case for tightening monetary policy as the central bank meets next week.
That contrasts with China, where a measure showed factory output contracted more than forecast by any of the 16 analysts surveyed by Bloomberg before the release. Bloomberg’s commodity index fell to a 13-year low, while currencies of resource-exporting nations extended recent declines.
Manufacturing also underwhelmed in Europe, with German factory output unexpectedly slowing in July and a gauge of euro-region manufacturing and services falling from a four-year high.
“As far as foreign exchange goes, the dollar is certainly the one you feel the most comfortable with,” Matt Derr, a foreign-exchange strategist at Credit Suisse Group AG in New York, said by phone. “Especially on the Chinese data, it was quite a bit weaker than what the market was looking for.”