Dollar Index Rises to 3-Month High Before U.S. Data; Pound Drops
The Dollar Index (DXY) rose to a three- month high before the release of U.S. leading indicators and a regional manufacturing gauge that may add to evidence a recovery in the world’s largest economy is gathering pace.
The U.S. currency gained versus most of its 16 major counterparts after minutes of the Federal Reserve’s January meeting released yesterday showed several policy makers advocated varying the pace of bond purchases. The euro fell for a second day before data that economists say will show manufacturing and services industries shrank in the currency bloc. The pound weakened to a 2 1/2-year low against the dollar.
“Dollar strength is gradually gaining momentum,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp. (8711), a currency-margin company. “There are clearer signs of a U.S. economic recovery.”
The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback versus the currencies of six U.S. trading partners, gained 0.1 percent to 81.107 at 7:52 a.m. in London after rising to 81.279, the highest level since Nov. 16.
The euro fell 0.2 percent to $1.3265 after dropping 0.8 percent yesterday. The common currency declined 0.2 percent to 123.03 yen. The yen rose 0.1 percent to 93.46 per dollar.
The Conference Board’s index of U.S. leading indicators rose 0.2 percent in January, after gaining 0.5 percent in December according to a Bloomberg News survey before today’s report. A Fed report on manufacturing in the Philadelphia area is projected to show a rebound, a separate survey showed.
Euro-area manufacturing and services industries probably contracted in February, according to a Bloomberg survey of economists. The manufacturing purchasing managers index is projected to be 48.5 compared with 47.9 in January, and the services PMI may be 49 from 48.6 a month earlier. A reading below 50 indicates contraction.
The dollar strengthened 1.6 percent this year, while the euro rose 2.3 percent, according to Bloomberg Correlation- Weighted Indexes that track 10 developed-market currencies. The yen was the worst performer, sliding 6.6 percent.
Sterling dropped 0.3 percent to $1.5195 after declining to $1.5132, the weakest since July 2010. Against the euro, it fell 0.2 percent to 87.36 pence.