Lukanyo Mnyanda and Andrea Wong Edinburgh
CENTRAL banks around the world are giving investors the green light to buy the dollar, pushing it to a three-week high against its major counterparts after the Federal Reserve ended its bond-purchase stimulus programme.
The dollar extended gains after reports showed that the US economy had expanded more than forecast in the third quarter and the four-week average of jobless claims fell to the lowest in more than 14 years.
The euro, set for its biggest annual drop since 2005, slid before a report today that analysts said would show inflation had remained below the European Central Bank’s target. Norway’s krone reached the lowest since 2009 and the yen weakened before a Bank of Japan policy meeting today.
“Markets are moving back toward trading that theme of monetary-policy divergence” and pushing the dollar higher, said Peter Dragicevich, a currency strategist at Commonwealth Bank of Australia in London.
The Bloomberg Dollar Spot Index, which tracks it against 10 major currencies, advanced 0.2 percent to 1 071.63 at 8.38am New York time after being at 1 073.85, the strongest since October 6.
The dollar added 0.3 percent to $1.2595 per euro after appreciating to $1.2548, also the strongest level since October 6.
It rose 0.1 percent to ¥109.04 (R11) after touching 109.36, the highest since October 6. Japan’s currency appreciated 0.2 percent to 137.30 per euro.
Gross domestic product grew at a 3.5 percent annualised rate in the three months ended September after a 4.6 percent gain in the second quarter, Commerce Department figures showed yesterday in Washington.
It marked the strongest back-to-back readings since the last six months of 2003. The median forecast of 87 economists surveyed by Bloomberg called for a 3 percent advance.
The four-week average of jobless claims, a less-volatile measure than the weekly figure, fell to 281 000 in the period ended October 25, the lowest since May 2000, from 281 250 the week before, a Labour Department report showed yesterday in Washington. Compared with the prior week, applications for benefits rose by 3 000 to 287 000.
The federal open market committee yesterday dismissed recent turmoil in global markets and focused instead on “solid” employment gains.
It said the labour market had strengthened enough to withstand an end to its quantitative-easing programme and downplayed the risks that are posed by slowing inflation. – Bloomberg