Investing.com – The dollar rose against a basket of major currencies as investors cheered bullish economic data pointing to underlying strength in the US economy.
The , which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.36% to 89.36.
data for January showed an uptick to 59.9, beating expectations of 56.5.
The services sector is critical component of the US economy, accounting for roughly 80% of U.S. private-sector gross domestic product (GDP).
Analysts said the strong ISM reading was indicative of strong economic activity, which could strengthen further should tax-reform measures lead to a solid rise in consumption.
“The reading today is consistent with an economy that is growing close to 3%,” Bank of Tokyo Mitsubishi said. “If consumers and companies spend the tax reform monies like they are supposed to, this could be the best year for the economy since the housing bubble years in the mid-2000s.”
Also supporting the dollar was a slump in the pound following UK data that fell short of expectations. While the euro moved off lowed against the greenback following comments from European Central Bank governor Mario Draghi who confirmed the euro area economy was expanding and inflation remained on track to meet the central bank’s target of close to 2%.
fell to 0.68% to $1.4017, while fell 0.35% to $1.2412.
fell 0.10% to Y110.05, while rose 0.51% to C$1.2492 as the loonie came under pressure following reports that North American Free Trade (NAFTA) negotiations turned sour after reaching an impasse over dairy trade.
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