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Dollar rallies as risk appetite rises
THE US dollar rose on Friday, hitting 10-week-highs against the yen, as risk appetite improved amid a more upbeat outlook on some major economies of the world and the prospect of a trade deal between China and the United States.
The dollar index, a gauge of the currency's value against six major currencies, rose 0.4 per cent last Friday, posting its largest daily percentage gain in two weeks.
"Looking at the whole G-10 (Group of 10 major currencies) space, there has been more follow-through from US-China trade optimism that was already in the process of getting priced in during the month of February," said Stephen Gallo, European head of FX strategy, at BMO Capital Markets in London.
"Meanwhile, one of the biggest boosts to the US dollar is coming from a weak yen," he added.
Friday's slew of weaker-than expected US economic data weighed on the dollar initially, especially the manufacturing index, but the greenback rallied to trade higher on the day.
In afternoon trading, the dollar index rose 0.4 per cent to 96.307. For the month of February, the dollar index was up 0.4 per cent.
The dollar was also supported by data on Thursday showing US gross domestic product grew at an annual 2.6 per cent rate in the fourth quarter, exceeding forecasts for a 2.3 per cent gain.
Benchmark 10-year US Treasury yields have risen about nearly 10 basis points last week, the highest weekly increase in four months. The yield surged to 2.759 per cent on Friday, a four-week high.
The dollar was up 0.5 per cent against the yen at 111.93 yen after hitting a 10-week peak, its best daily increase since Feb 11.
Sterling was also down 0.5 per cent versus the dollar at US$1.3193, its largest percentage fall in roughly three weeks.
The euro, meanwhile, slipped 0.1 per cent against the greenback at US$1.1356. Earlier data showed that underlying inflation in the eurozone remained subdued. REUTERS