Dollar Drops Versus High-Yield Peers on China Data; Pound Rises
LONDON (Sept 4) The dollar weakened against its higher-yielding counterparts after a report showed China’s services industry expanded last month, adding to signs the global economy is recovering.
The U.S. currency ended a five-day run of gains that took it to the highest level since July, according to the Bloomberg U.S. Dollar Index. Australia’s currency climbed for a third day after the nation’s economic growth quickened, while the New Zealand dollar and the South African rand also advanced. The pound rose for a sixth day versus the euro, climbing to the strongest level in more than three months, after a gauge of U.K. services output reached the highest level since December 2006.
“There is more confidence that the global economy is appearing to be robust,” said Michael Sneyd, a currency strategist at BNP Paribas SA in London. “We generally are seeing investors putting on risk-on positions, particularly in the Aussie and the kiwi, following slightly stronger data in Australia and China.”
The Bloomberg U.S. Dollar Index, which tracks the greenback against 10 other major currencies, fell 0.2 percent to 1,034.17 at 7:01 a.m. New York time after reaching 1,038.61 yesterday, the most since July 16. The index had risen 1.1 percent in the past five days.
The Aussie dollar climbed 1.1 percent to 91.59 U.S. cents after reaching 91.68, the highest since Aug. 19. The New Zealand dollar also strengthened 1.1 percent, to 78.89 U.S. cents, while the South African rand, the worst performer against the greenback this year, advanced 1 percent to 10.2304 per dollar.
HSBC Holdings Plc’s and Markit Economics’ services gauge for China rose to 52.8 last month from July’s 51.3. An official report released Sept. 1 showed a manufacturing gauge climbed to a 16-month high in August, while data yesterday revealed the government’s services index at 53.9 in August, above the 50 level that indicates expansion.
The dollar was little changed at 99.46 yen after reaching 99.86 yesterday, the highest since Aug. 2. The U.S. currency was also little changed, at $1.3184 per euro after touching $1.3139 yesterday, the strongest since July 22. The yen traded at 131.09 per euro.