Early trade in New York: dollar hits five-week low against basket of currencies

The dollar fell to a five-week low against a basket of currencies on Friday as investors grew optimistic about the strength of the euro zone's recovery and lost appetite for the greenback. The single currency hit its highest since September 25, up 0.25 percent on the day and nearly 0.75 percent for the week. It would be the euro's third straight week of gains against the dollar, its best run since July.
"You had good data (this week) from Europe, pretty good news from Germany and nobody guarding the dollar as we're all eating turkey," said John Doyle, director of markets at Tempus Inc in Washington. On Thanksgiving Thursday, while markets in the US were closed, euro zone business growth surveys showed surprise growth, supporting the European Central Bank's move last month to announce a throttling back of its monetary stimulus.
The currency bloc has emerged as the surprise economic star of 2017 and future-looking indicators in the latest Purchasing Managers' Index (PMI) suggest the upturn still has momentum. The dollar index fell to its lowest since October 13 at 92.876, having suffered its worst single-day decline in more than five months on Wednesday after minutes from the Federal Reserve's latest policy meeting showed some policymakers concerned about stubbornly weak US inflation.
The core personal consumption expenditures price index has consistently fallen short of the central bank's 2 percent target for over five years, even as the Fed has moved toward normalizing policy. "There's an underlying medium-term trend here taking shape towards a weaker dollar," said BMO Capital Markets currency strategist Stephen Gallo, in London.
The euro makes up more than 50 percent of the dollar index's weight. Sterling rose to its highest against the dollar since October 2 as markets interpreted the latest comments from top European Union policymakers as mildly positive for Brexit negotiations.