Positive US data drives the dollar

Published: 27 May at 5 AM Tags: Euro, Dollar,

Upbeat economic data coming from the US has helped to boost the dollar. A more than 1 per cent climb against a basket of other currencies came on the back of expectations the Federal Reserve will hike interest rates before the end of the year.

Against the yen the dollar hit an eight year high. The greenback has also put pressure on the euro. The single currency is already suffering because of fears over Greece’s debt crisis. The euro dropped below $1.09, the first time the currency has done so in a month. The dollar index made a gain of 1.31 per cent, its largest single-day increase in two years.

Positive US business investment figures helped the dollar to hit 123.32 yen, the highest the greenback has been against its Japanese rival since July 2007. Other data released this week that indicates growth in the US includes an increase in new single-family homes and a consumer confidence rise.

The euro is currently down by around a per cent at $1.0873. As well as concerns over Greece there has been a drop in government bond yields in Germany which has made the dollar more attractive to investors.

Athens remains confident that it will not default on its latest debt payments to the IMF next week.