Economist are forecasting the greenback to strengthen to its best since 2010 against its peers, as investors are expecting reports to show the world’s largest economy increased its spending for an eighth month.
Meanwhile, the Japanese yen added monthly gains against a basket of its major peers while stocks for the country declined and reports revealed inflation increased. The 18-block euro was seen hovering for its biggest monthly decline since March before the Central Bank policy meeting scheduled for February 6.
The dollar index, which monitors the strength of the greenback against a basket of 10 major currencies, came in at 1.030.62. The US dollar traded at $1.3536 per euro from $1.3555. The Japanese yen rose 0.2% higher to 102.49 per dollar, heading for a 2.7% monthly gain.
US Economy Recovery
While the market awaits reports from the Commerce Department report later in the day, analysts forecast to see a rise in the US consumer spending by 0.2% in December, compared to the 0.5% advance seen in November.
Figures from the Commerce department revealed the world’s largest economy expanded by 3.2% in the fourth quarter, meeting analysts’ estimates.
Following the Federal Reserve’s two day policy meeting, Fed policymakers concluded the meeting by deciding to reduce the central bank’s stimulus further by $10 billion to $65 billion, showing signs that the world’s largest economy is expanding.
The US data surprise index for Westpac Banking climbed to its highest this month since June. “The recent improvement in U.S. growth sentiment is living on borrowed time,” New-York based chief currency strategist Richard Franulovish wrote in a note.
“We would expect the trend in growth differentials to continue to shift in the USD’s favor over the medium term,” he wrote. “However, there will be setbacks and if anything we could be on the cusp of one.”
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