The dollar traded near a two-week high against the euro on signs the
economy is weathering the housing slump and record gasoline prices.
An index gauging the greenback against the currencies of six U.S.
trading partners rose for a third day after reports showed services
industries expanded in May at a faster pace than forecast and companies
unexpectedly added jobs.
``The tone is still dollar-bullish for the day,'' said Boris
Schlossberg, senior currency strategist in New York at DailyFX.com, an
online currency dealer. ``The U.S. economy doesn't have the worst-case
scenario.''
Weaker Pound. The pound fell to a two-week low against the dollar after
a report showed British consumer confidence dropped in May to a
four-year low. Sterling dropped as much as 0.5 percent to $1.9527, the
weakest level since May 20.
Еconomists predicted the Bank of England will keep borrowing costs
unchanged tomorrow. Expectations for inflation over the next decade
held near an eight-year high, as measured by the spread between the
10-year gilt and its index-linked counterpart.
The dollar traded within a cent of a two-week high against the euro as
reports showed unexpected signs of resilience in the world's largest
economy.
The Institute for Supply Management's index of non- manufacturing
businesses decreased to 51.7 last month from 52 in April. The median
forecast of 73 economists surveyed by Bloomberg News was for a drop to
51. A reading of 50 is the dividing line between growth and contraction.
Company Hiring U.S. companies added 40,000 jobs, followed a revised
gain of 13,000 for the prior month that was more than previously
estimated, ADP Employer Services said. The median forecast economists
was for a reduction of 30,000.
The dollar has increased 3.5 percent since touching the all-time low of
$1.6019 per euro on April 22, as the Fed signaled it will stop cutting
interest rates. It has traded between $1.54 and $1.58 since mid-May.
The U.S. Dollar Index, tracking the greenback's performance versus six
peers, increased 0.2 percent to 73.501. It touched 73.501 yesterday,
the highest since May 15.
Futures on the Chicago Board of Trade show a 63 percent chance the Fed
will raise the 2 percent target rate for overnight lending between
banks by at least a quarter-percentage point by December, compared with
59 percent odds a month ago.
The European Central Bank will hold its main refinancing rate at a
six-year high of 4 percent tomorrow, all 59 economists surveyed by
Bloomberg News predicted. The ECB has kept the rate at that level since
June 2007.
The dollar will strengthen to $1.50 against the euro and trade at 105
yen by the end of the year, according to the median forecast of 41
economists surveyed by Bloomberg News.