By Karen Brettell
NEW YORK (Multibagger) - The dollar climbed to a six-week peak on Thursday as robust U.S. economic data and concerns over escalating Middle East tensions and a dockworker strike bolstered safe-haven demand for the currency. The greenback has also been supported by more dovish expectations from other central banks.
Data released on Thursday revealed that U.S. services sector activity hit a 1-1/2-year high in September, driven by strong new orders growth. However, services employment declined, signaling a potential slowdown in the labor market.
According to Juan Perez, director of trading at Monex USA in Washington, the U.S. dollar displayed resilience despite slightly contractionary data, highlighting its strength compared to other global currencies.
Further data showed a slight increase in Americans filing new jobless claims, but disruptions caused by Hurricane Helene and strikes at Boeing and ports could distort the labor market outlook in the short term.
The dollar index rose 0.33% to 101.98, reaching 102.09, its highest level since August 19. This week, the dollar has been regaining ground amid various market dynamics, noted Vassili Serebriakov, FX & macro strategist at UBS in New York.
Improving economic indicators and hawkish comments from Federal Reserve Chair Jerome Powell have tempered expectations of a 50 basis point rate cut at the upcoming November meeting.
Friday's highly anticipated jobs report could influence Fed policy, with economists forecasting 140,000 job additions and an unchanged unemployment rate of 4.2%.
Traders are now pricing in a 35% chance of a 50 basis point rate cut next month, down from 49% a week ago, according to the CME Group's FedWatch Tool.
The U.S. dollar has also benefited from safe-haven demand following an attack on Israel by Iran and a major dockworker strike in the U.S., raising concerns of supply chain disruptions.
Amidst these developments, the euro and sterling have weakened due to expectations of rate cuts by the European Central Bank and the Bank of England, respectively.
The dollar also reached a six-week high against the yen as the Bank of Japan signaled a cautious approach to monetary policy adjustments.
Overall, the dollar's strength reflects its status as a safe-haven asset amidst global uncertainties, impacting various currencies and financial markets.
In the cryptocurrency market, bitcoin fell 0.36% to $60,687.91.