The dollar is showing signs of recovery after suffering its longest losing streak since May.
A gauge of the greenback versus its major peers rose for a second day, and the dollar bounced back from a seven-week low against the euro, amid optimism a string of data will refocus traders’ attention on the strength of the U.S. economy. Even though bets on an early interest-rate increase have been pushed back, the argument goes, the Federal Reserve will still tighten monetary policy before other major central banks.
The Bloomberg Dollar Spot Index climbed 0.3 percent as of 6:37 a.m. New York time, bringing its advance over the past two days to 0.5 percent. That eroded three weeks of losses that saw the measure slide 2 percent. The dollar also rallied against currencies of commodity exporters and developing economies, which had been gaining for most of this month.
“We are very positive on the dollar,” said Michael Sneyd, a London-based foreign-exchange strategist at BNP Paribas SA. “As the market focuses more on the data that’s coming out of the U.S., then commodity currencies will be left looking very vulnerable.”
Data from the U.S. are seen adding to evidence of enduring economic strength that’s bypassing other major nations which are still considering extending their record stimulus.
Consumer sentiment in the U.S. improved this month, while a slowdown in industrial production eased in September, according to economists surveyed before reports due later Friday.
U.S. consumer prices excluding food and fuel climbed the most in three months in September, data Thursday showed. By contrast, euro-zone inflation has turned negative for the first time since the ECB started quantitative easing.
The dollar strengthened 0.4 percent to $1.1346 per euro, a day after it slid to $1.1495, the weakest level since August. It was little changed at 119 yen, after falling to an almost two-month low Thursday.
“The U.S. rate cycle still looks to be on a different plane than the other central banks,” saidMitul Kotecha, head of foreign-exchange and rates strategy for Asia at Barclays Plc in Singapore. “We’re still constructive on the dollar, especially at these sort of levels where we’ve seen some weakness.”