A key dollar index rose for the second consecutive month last week, the first time in over a year, on bets that the Federal Reserve will hike interest rates soon amid talks of stimulus in Japan and Europe.
The Bloomberg Dollar Spot Index, which monitors the dollar versus 10 major peers, gained 0.7 percent to trade at 1,029.48 in August at the close of trading in New York last Friday. The euro touched its lowest level against the dollar after data showed that inflation in the euro area slowed in August. The greenback advanced 1.9 percent to trade at $1.3132 per euro and rose 1.3 percent to 104.09 yen. The euro gained 0.7 percent to 136.69 yen.
U.S. markets will be shut tomorrow for Labor Day.
“When you look at which currencies the dollar strengthened against, it’s primarily the euro, a little bit against the yen, over the past several weeks,” Vassili Serebriakov, a foreign-exchange strategist at BNP Paribas SA in New York, told Bloomberg News. “It’s the policy-divergence theme that’s become more prominent as a driver of Group of 10 currencies.”
Euro-zone consumer prices increased 0.3 percent in the year through August, compared with a 0.4 percent gain in July, reported the European Union statistics office on Friday. This was the slowest pace since October 2009. The weaker inflation fuelled speculation the European Central Bank will hike interest rates soon.
Meanwhile, the ruble fell on speculation that Russia may be slapped with further sanctions due to an escalation of violence in Ukraine. The ruble fell 4 percent in August, touching a low of 37.2170 versus the dollar.To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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