NEW YORK- The dollar rose against a basket of currencies, boosted by encouraging US manufacturing data, but remained on track for a weekly loss as traders’ concerns about taper talk in US Federal Reserve minutes moderated.
The dollar has given back much of the advance it made after a mention in minutes from the Fed’s April monetary policy meeting of possible future discussions on paring back stimulus, raised hopes US interest rate raises might come earlier than previously thought.
“Taper concerns have faded rather quickly, it would seem,” Shaun Osborne, chief currency strategist at Scotiabank, said in a note.
The US currency found some support after data showed US factory activity gathered speed in early May amid strong domestic demand.
The dollar index, measuring the greenback against a basket of six currencies, was 0.222 percent higher at 89.993. The index, which hit a four-month low earlier in the session, was on pace for a loss of 0.4 percent for the week.
Some strategists remain doubtful the Fed will rush to pull back from its accommodative stance.
“We continue to expect the USD to remain soft while US yields remain contained,” Osborne said.
Still, continued improvement in US data, especially relative to Europe, is likely to bolster the bull case for the greenback, other analysts said.
“The latest flash PMIs reinforce our view that the economy will continue to grow at a faster pace in the US than in the euro-zone in the next few years,” said Simona Gambarini, markets economist at Capital Economics. – Reuters
