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Dollar gains as Wall St rebounds from 6-day rout

Thursday, August 27, 2015 - 06:49
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US private employers maintained a solid pace of hiring in August despite recent global financial market turmoil, suggesting that labour market momentum likely remains strong enough for the Federal Reserve to consider an interest rate hike this year.

[NEW YORK] The dollar broadly strengthened on Wednesday as a strong US equities rally snapped a six-day rout, signaling resilience in the face of China's woes that have roiled markets.

A better-than-expected official US manufacturing report, showing orders for durable goods - products expected to last at least three years - jumped 2.0 per cent in July.

"Two days of gains now have the US currency in positive territory for the volatile week. Fueling the dollar's modest winning streak has been the first up day in seven on Wall Street, which helped whet market appetite for risk, weighing on the euro and buoying the dollar," said Joe Manimbo, senior market analyst at Western Union Business Solutions.

The euro fell to US$1.1312 in late-afternoon trade, from US$1.1518 a day earlier.

A top Fed official earlier in the day downplayed the potential for a hike in near-zero interest rates in September, a timing that had been widely expected until China's surprise currency devaluation two weeks ago unleashed global market turmoil.

The need to begin normalising monetary policy next month "seems less compelling to me than just a few weeks ago," said William Dudley, head of the Fed's New York branch and a voting member of the rate-setting Federal Open Market Committee.

AFP