The dollar appreciated to the strongest level in two years versus the euro before reports this week economists said will show U.S. consumer confidence and retail sales improved.
A gauge of the dollar headed for its highest close in more than five years after China said imports unexpectedly fell in November, underpinning demand for the currency of the U.S. where growth is beating forecasts. The New Zealand and Australian dollars slid to the weakest levels in at least two years after the data from China, the nations’ largest trading partner. South Africa’s rand slumped to a six-year low and Russia’s ruble extended its drop versus the greenback this year to 39 percent.
“We’re seeing good fundamental support for the dollar move,” said John Hardy, the head of foreign-exchange strategy at Saxo Bank A/S in Hellerup, Denmark. “It’s not just about the currency moving higher we’re also seeing the market drastically marching forward the first anticipated Federal Reserve rate hike. Any currency where the economy is leveraged to oil is still weak. U.S. rates heading higher is a very strong negative for emerging markets.”
The dollar gained 0.2 percent to $1.2256 per euro at 10:11 a.m. London time, the strongest since August 2012, after gaining 1.4 percent last week. The U.S. currency fell 0.3 percent to 121.13 yen. The yen strengthened 0.5 percent to 148.46 per euro.
The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 trading partners, climbed 0.1 percent to 1,123.56, set for the highest close since March 2009.
China’s imports fell 6.7 percent, the customs administration said, compared with the median estimate among economists surveyed by Bloomberg News for a gain of 3.8 percent increase. Exports (CNFREXPY) rose 4.7 percent from a year earlier, less than the forecast for growth of 8 percent.
New Zealand’s dollar slid as much as 1.1 percent to 76.24 cents, the lowest level since June 2012. Australia’s dropped for an eighth day and touched 82.60 cents, the lowest since June 2010.
“The New Zealand dollar is high beta to the U.S. dollar, so if the U.S. dollar rallies, the New Zealand dollar will be sold aggressively,” said Imre Speizer, a markets strategist at Westpac Banking Corp. in Auckland. “Also, we have the RBNZ this week, which will have a dovish shift from the previous forecasts in September,” he said, referring to the central bank’s policy decision on Dec. 12.
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