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Dollar hits strongest level of 2018, euro slips

By Reuters - May 08,2018 - Last updated at May 08,2018

US dollar banknotes are seen in this photo illustration taken on February 12 (Reuters file photo)

NEW YORK — The dollar hit its highest level against a basket of currencies so far in 2018 as investors increased bets that rising interest rates in the United States would boost the greenback, while traders unwound their bearish positions on the currency.

The index that tracks the dollar against a basket of currencies climbed to 92.974, its highest since December.

It was last up 0.2 per cent at 92.792.

Speculators trimmed their bets on a falling dollar to the lowest in seven weeks last week, based on data from the Commodity Futures Trading Commission released on Friday.

Friday’s somewhat disappointing US payrolls report, which showed hiring and wage growth fell short of expectations, did not alter traders’ outlook for further rate increases from the Federal Reserve.

“Nevertheless, the data was still expansionary, showing tepid but positive growth,” Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York, said of the April jobs data. 

“In contrast, today news from the eurozone only added to the sense of dread in the region as consumer spending slowed materially,” he added. 

Traders have scaled back expectations on the timing of when the European Central Bank may raise interest rates following a spate of disappointing regional economic readings.

The euro broke below $1.19 for the first time this year in the aftermath of weaker-than-expected data on German industrial orders and eurozone investor sentiment.

The euro shed 0.33 per cent at $1.1918 after touching $1.1896, the lowest in more than four months.

The British pound traded up 0.25 per cent at $1.3560, bouncing off a four-month low of $1.3487 set last week.

Sterling has slumped in the past fortnight as investors reversed expectations of a rate hike at the Bank of England’s upcoming meeting on Thursday amid soft domestic data.

UK financial markets were closed for a bank holiday.

The Reserve Bank of New Zealand will also meet on Thursday and is expected to hold its key interest rate at a record low of 1.75 per cent.

The Kiwi was down 0.2 per cent at $0.7008, holding above its year-to-date low of $0.6985 set last week, Reuters data showed. 

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