The US dollar rose to its highest in 14 years against the euro and a basket of major currencies on Tuesday after data showed solid growth in US manufacturing. The dollar index rose to 103.820, its highest level since December 2002 after data showed US factory activity accelerated to a two-year high last month and construction spending rose to its highest in 10-1/2 years in November.
The index, which tracks the greenback against a basket of world currencies, appeared set for its biggest one-day percentage rise in more than two weeks in 2017's first full day of trading. "Job growth appears to be picking up, orders are picking up quite strongly, prices are increasing quite strongly as well," said Shaun Osborne, currency strategist at Scotia Capital in Toronto. "That suggests the (Federal Reserve) is going to have to remain active in this kind of environment. So this on the whole is a generally constructive set of data for the dollar here in a time of the year where typically the dollar does quite well."
The growing consistency of strong US economic reports has led to expectations of increased tightening of US interest rates from the Fed and rosier outlooks on the overall health of the world's largest economy, analysts said.
The euro fell to a 14-year low against the dollar, dropping to $1.0342 after the data's release. The dollar gained against the yen as well, reaching 118.60 yen, its highest since December 15 and just a hair below its highest point since February as a holiday in Japan thinned Asian trading. The greenback also rose against the Swiss franc to its highest since December 15.
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