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Greenback gains on US economic optimism

New York

THE greenback rose to a one-week high against the euro on Friday as economic data pointed to solid economic growth, and reduced fears about an impending slowdown.

US homebuilding surged to a 13-year high in December as activity increased across the board, suggesting the housing market recovery was back on track amid low mortgage rates. It comes after data on Thursday showed that US retail sales increased for a third straight month in December, while a gauge of manufacturing activity in the US Mid-Atlantic region rebounded in January to its highest level in eight months.

"The last couple of sessions we've gotten some pretty good data," said Bipan Rai, North American head of FX strategy at CIBC Capital Markets in Toronto on Friday. "There was a little bit of concern by the Federal Reserve with regard to the health of the consumer and household market in the US, but it seems like yesterday's retail sales numbers and also the housing data from yesterday and today have assuaged some of those fears for the time being," Mr Rai said.

The euro fell 0.41 per cent against the dollar to $1.1089. The Japanese yen rose hit 110.28, the weakest since May, before falling back to 110.12.

US stock indexes were driven higher by optimism over corporate earnings, upbeat economic data and indications of resilience in China's economy.

Data on Friday showed that China's economy ended the year on a firmer note, even as economic growth cooled to its weakest in nearly 30 years.

"December data signalled a strong finish for the Chinese economy and that suggests the Chinese economy may be primed for a rebound in 2020," said Lee Hardman, a currency strategist at MUFG in London.

The offshore Chinese yuan also strengthened as far as 6.8567, the strongest since July. REUTERS