U.S. Dollar Appreciates on Growing Prospects for Stronger Economic Performance

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U.S. Dollar Appreciates on Growing Prospects for Stronger Economic PerformanceThe U.S. dollar rose to its highest level in six weeks versus its major counterparts on growing prospects of U.S. economic recovery.

The greenback rose 0.1 percent to trade at 102.00 yen after touching 102.01 yen, its strongest level since July 7. The dollar remained unchanged at $1.3433 per euro.

“The dollar is being bought back against its major peers,” Tomohito Katagiri, a Tokyo-based analyst at Ueda Harlow Ltd., told Bloomberg. “The greenback could touch 102 yen today now that U.S. long-term yields seem to have found a bottom.”

The Bloomberg Dollar Spot Index, a measure of U.S. currency versus 10 major peers, remained slightly unchanged at 1,014.60 by 8:16 a.m. in London after earlier touching 1,014.76, it strongest level since June 18.

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Most analysts expect the Commerce Department to announce that the U.S. economy grew by 3 percent in the second quarter, the most since the quarter through September 2013. This compares with a revised 2.9 percent decline in the January-March quarter this year.

The yield of 10-year U.S. notes remained unchanged at 2.49 percent after rallying 0.02 percentage point or two basis points on Monday. The U.S. Treasury sold 2-year notes worth $29 billion at 0.544 percent on Monday, the largest auction yield since May 2011.

Meanwhile, the New Zealand dollar declined on speculation that the country’s dairy farmers may earn lower profits. The kiwi plunged 0.4 percent to trade at 85.10 U.S. cents after earlier declining to 85.07 cents, the weakest level since June 10. This is after the Fonterra Cooperative Group, the world’s biggest dairy exporter, lowered its milk prices forecast for the 2014/15 season. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com