Dollar Index Extends 4-Year High On Strong US Factory Data

Washington  (Nov 3)  The dollar continued to strengthen Monday, jumping to a fresh 4-year peak after upbeat manufacturing data reinforced belief in the US economic recovery.

Traders are now betting the Federal Reserve will raise interest rates a little early next year while central bankers in  Europe  and  Japan  offer additional stimulus.

The  Institute for Supply Management's  US factory index increased to 59 in October, matching August as the highest since  March 2011  , after 56.6 the prior month.

It was the best reading in about a decade and underscores the resiliency of the nation's economy after a rough first quarter of the year.

The dollar jumped to  USD1.2440  versus the euro, its highest since 2012, as markets assessed another batch of troubling economic news from  Europe  .

The eurozone's manufacturing Purchasing Managers' Index rose slightly less than initially estimated in October.

Data from Markit Economics showed the final PMI rose to 50.6 in October from September's 14-month low of 50.3. The flash score was 50.7.

Separate data showed that  Germany's  manufacturing sector returned to growth zone in October. The  Markit  /BME PMI rose to 51.4 in October from a 15-month low of 49.9 in September. Nonetheless, the score was slightly below the flash estimate of 51.8.

The buck also ran higher versus the yen, rising to a new 6-year peak above  Y114  . The Japanese currency was already down sharply for the year when the  Bank of Japan  surprised markets with increased stimulus to fight deflation Friday.

There was little movement against the sterling near  USD1.60  , with the dollar holding on to recent gains.

The sterling was supported by figures showing the  UK  manufacturing sector growth quickened more than expected in October to its fastest pace in three months.

Source: AllianceNews