You are here
US dollar hits 14-year highs after strong US manufacturing data
[NEW YORK] The US dollar rose to its highest in 14 years against the euro and a basket of major currencies on Tuesday after data showed solid growth in US manufacturing.
The US dollar index rose to 103.820, its highest level since Dec 2002 after data showed US factory activity accelerated to a two-year high last month and construction spending rose to its highest in 10-1/2 years in November.
The index, which tracks the greenback against a basket of world currencies, appeared set for its biggest one-day percentage rise in more than two weeks in 2017's first full day of trading.
"Job growth appears to be picking up, orders are picking up quite strongly, prices are increasing quite strongly as well," said Shaun Osborne, currency strategist at Scotia Capital in Toronto.
"That suggests the (Federal Reserve) is going to have to remain active in this kind of environment. So this on the whole is a generally constructive set of data for the dollar here in a time of the year where typically the dollar does quite well."
The growing consistency of strong US economic reports has led to expectations of increased tightening of interest rates from the Fed and rosier outlooks on the overall health of the world's largest economy, analysts said.
That has helped elevate the US dollar to its strongest in nearly a decade and a half as investors gear up for expected cuts in regulations and tax rates, as well as increased fiscal spending, from the administration of President-elect Donald Trump.
The euro fell to a 14-year low against the US dollar, dropping to US$1.0342 after the data's release.
The US dollar gained against the yen as well, reaching 118.60 yen, its highest since Dec 15 and just a hair below its highest point since February as a holiday in Japan thinned Asian trading.
It later retraced much of those gains, even turning negative against the yen after investors took profits on the day's strong moves. TheUS dollar was last up 0.1 per cent at 117.64 yen.
The greenback rose to its highest against the Mexican peso since Nov 11, the day it hit its all-time high, after Ford Motor Co said it would cancel a planned US$1.6 billion factory in Mexico and instead invest US$700 million in a Michigan plant due to sagging demand for small cars.
Ford had faced criticism from Mr Trump for its Mexican investment plans and the company's executive chairman, Bill Ford Jr, said he personally notified the president-elect of the decision.