The US dollar on Friday gained against the euro for the first week since the middle of June after data showed a strong uptick in US business activity, while the single currency was held down as this month’s batch of European business surveys pointed to a stuttering economic recovery.
US business activity this month snapped back to the highest since early last month as companies in the manufacturing and services sectors saw a resurgence in new orders even as new COVID-19 cases remain stubbornly high across the country.
“The Markit PMI [purchasing managers’ index] flash readings show the US is outperforming Europe,” Oanda Corp senior market analyst Edward Moya said.
The data contrasted with weakness in the eurozone, as the pent-up demand unleashed last month by the easing of COVID-19 lockdowns dwindled.
“Clearly the PMI numbers this morning suggest that Europe is losing a little momentum here and that we’re seeing some turbulence in other areas of the global economy. So that is weighing on the performance gap between the US and its major counterparts,” Cambridge Global Payments chief market strategist Karl Schamotta said.
The US dollar index against a basket of major currencies rose 0.4 percent to 93.24, rising 0.1 percent for the week.
In Taipei on Friday, the New Taiwan dollar rose against the greenback, gaining NT$0.010 to close at NT$29.512, rising 0.1 percent from last week.
The euro dipped to a one-week low of US$1.175 against the greenback earlier, before rising back to US$1.179, down 0.61 percent on the day and inching down 0.08 percent for the week.
The greenback escaped a ninth consecutive weekly decline.
The recovery in the US dollar began on Wednesday after the US central bank’s rate-setting Federal Open Market Committee released minutes from its last meeting, the tone of which was more dovish than expected.
The minutes prompted US dollar bears to buy into the heavily shorted currency, fueling its biggest one-day surge in more than two months.
“You’re seeing a bit of an unwind in the short dollar trade that had gained so much momentum in the last couple months,” Schamotta said.
Additional reporting by CNA, with staff writer
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