Written by Lei Wee
SINGAPORE, Oct 25 (Reuters) – The dollar edged higher on Wednesday after another strong U.S. economic report, while the euro struggled on the back of a dimming outlook for growth in the region.
The Australian dollar rose more than 0.5% in an initial knee-jerk reaction after Australia recorded higher-than-expected inflation on Wednesday.
Tuesday’s data showed that U.S. business output trended up in October as manufacturing emerged from a five-month contraction, but separate data released the same day showed, by contrast, business activity in the euro zone rose. The situation showed an unexpected deterioration this month.
The euro fell 0.75% against the dollar on Tuesday, but was last up 0.05% at $1.0595.
The dollar index rose due to the single currency’s decline, moving away from the one-month low of 105.35 hit in the previous session and eventually settling at 106.23.
The euro is the most weighted currency in the dollar index, which measures the dollar against a basket of six compatriots.
Tina Teng, market analyst at CMC Markets, said: “The eurozone economy is entering a kind of recession, and this economic development has increased expectations that the European Central Bank may have (reached) a peak in interest rates. ” he said.
“In contrast, the Federal Reserve could continue to raise interest rates simply because economic indicators look strong.”
The dollar’s strength has pegged the yen near the closely watched 150 yen mark, with the Japanese currency trading at 149.86 yen to the dollar. The stock has been mostly flat for the past month, with traders remaining on alert for signs of intervention by Japanese authorities.
Rising global interest rates have increased pressure on the Bank of Japan to change its bond yield management. Sources said earlier this week that a possible increase in the existing yield cap, which was set just three months ago, is being discussed ahead of next week’s policy meeting.
Elsewhere, the pound rose 0.04% to $1.2165, and the New Zealand dollar rose 0.08% to $0.5849.
The Australian dollar was last up 0.35% to US$0.6378.
“The[Reserve Bank of Australia’s]November meeting is likely to be broadcast live and the cash rate will rise to 4.35%,” said Matt Simpson, senior market analyst at City Index. I think it will be a significant increase.”
Among cryptocurrencies, Bitcoin was last down 0.28% at $33,822, hovering near an 18-month high on Tuesday.
The world’s largest cryptocurrency has tumbled this week after surging 10% on Monday on growing speculation that an exchange-traded Bitcoin fund is soon to be launched.
“Growth in the spot ETF market always means market growth across most of the crypto industry,” said John Glover, chief investment officer at crypto lender Reddon.
“If Bitcoin is bought for ETFs, the price will rise…There is a very real possibility that the launch of one or more spot ETFs will lead to the next big bull run across the crypto ecosystem.” There is a target.”
(Reporting by Rae Wee; Editing by Lincoln Feast.)