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US Dollar Index Touches 83.00

H.S. Borji
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US Dollar Index Touches 83.00

The US dollar index resumed its upward climb on Tuesday, setting fresh one-year highs on the strength of manufacturing and construction data.

The US dollar index, a weighted average of the greenback’s performance against a basket of currencies, advanced 0.28 percent to 82.98, easing slightly off an intraday high of 83.04.

The greenback’s ascent began in July, as an improving US economy fueled speculation the Federal Reserve may seek to normalize monetary policy sooner than initially forecast. The dollar has appreciated 4 percent in the process.

The dollar advanced to a fresh eight-month high against the Japanese yen, as the USDJPY surged 0.74 percent to 105.12. The pair has advanced 3.8 percent since July 1.

The euro remained under pressure on Tuesday, as the EURUSD tumbled for the fourth consecutive day. The pair declined 0.05 percent to 1.3121, rebounding from an intraday low of 1.3111.

The British pound was unable to rally after Markit Group said UK construction activity rose to a seven-month high. The GBPUSD tumbled 0.64 percent to 1.6500.

The greenback rebounded against the loonie, snapping last week’s losing streak. The USDCAD climbed 0.51 percent to 1.0927.

The dollar was unchanged against the Swiss franc, as the USDCHF consolidated at 0.9198.

Economic data continued to support the dollar on Tuesday. Two separate industry gauges showed the US manufacturing industry expanded sharply in August.

Markit Group’s manufacturing index advanced 2.1 percentage points to 57.9, the highest level since April 2010.

The Institute for Supply Management’s manufacturing index rose 2.9 percentage points to 59, the highest level since March 2011.

Both groups reported a surge in output and new business growth, which helped support a steady rise in payroll numbers.

The Labor Department will verify those findings on Friday when it releases August nonfarm payrolls data. Economists forecast the addition of around 200,000 nonfarm payrolls in August, which would mark the seventh consecutive month hiring was at or above that level. The unemployment rate is forecast to fall back to 6.1 percent in August.

In a separate report the Commerce Department said construction spending in July soared to its highest level in five-and-a-half years, rebounding from the previous month’s downturn.

The total value of construction put in place increased 1.8 percent to $981.31 billion, the highest reading since December 2008. Economists forecast a gain of 1 percent after construction spending declined 0.9 percent in June.

Private construction, which accounts for the majority of spending, increased 1.4 percent to $701.66 billion, the highest level since November 2008. Private residential construction increased 0.7 percent to $358.1 billion, a sign the housing market was recovering after a subdued first half of the year.

Housing starts climbed 15.7 percent in July to a seasonally adjusted annual rate of 1.093 million, the Commerce Department reported last month. The July figure was the highest since November 2013, snapping two consecutive months of declines.

Data on building permits suggest groundbreaking will increase at a steady pace in the coming months. July building permits increased 8.1 percent to 1.052 million, official data showed.

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