Investing.com – The dollar rebounded from nearly four-week lows against a basket of major currencies on Wednesday buoyed by bullish economic data stoking investor expectations for solid economic growth.
The , which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.26% to 91.80.
The greenback was on track to snap a ten-day losing streak as manufacturing and construction data topped economists’ forecasts.
The Institute for Supply Management (ISM) index of rose to a reading of 59.7 in December from 58.2 in the previous month. That beat economists for forecast for reading of 58.2.
A reading above 50 indicates growth in manufacturing, well below 50 indicates contraction.
The Commerce Department said rose 0.8% to a record of $1.257 trillion in November, topping economists forecast for a 0.6% rise.
The uptick in economic activity has fueled expectations for an uptick in inflation as Bank of Tokyo Mitsubishi recently said that strong gains in the in December pointed to inflationary pressures in the months ahead, which may strengthen the case for additional monetary policy tightening.
Other market participants, however, tempered expectations for a sharp turnaround in inflation as the Bank of Montreal warned that rising manufacturing costs are less important to the Fed’s inflation concerns than rising consumer costs.
The most recent reading of the Core Price Expenditure (CPE) Index, the Fed’s preferred measure of inflation, showed inflation remained well below the central bank’s target of 2%.
The data comes just hours ahead of the release of the Federal Reserve December meeting minutes. The minutes, however, is widely expected to offer little insight into the Fed’s thinking on monetary policy as the central bank is amid a transitional phase with Fed chair Janet Yellen expected to depart in the coming months.
gave up some its recent gains against the greenback after facing resistance at $1.36, while the struggled to pare losses despite recent reports suggesting the European Central Bank could rein in its accommodative policy measures.
gained 0.04% to Y112.33, while rose 0.21% to C$1.2537.
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