By Nick Gentle and Stephen Kirkland
The dollar rose to an almost seven-year high versus the yen as growth in manufacturing underscored the strength of the American economy. Most U.S. stocks fell as oil slid to its lowest level in more than two years.
The Bloomberg Dollar Spot Index was up 0.7 percent by 5 p.m. in New York as the currency jumped to its strongest level since December 2007 against the yen. The Standard & Poor’s 500 Index closed down less than 0.1 percent after reaching a record last week, with energy shares slipping 1.7 percent. The Russell 200 Index dropped 0.3 percent. West Texas Intermediate crude sank 2.2 percent to $78.78 a barrel after Saudi Arabia cut the price it charges for oil to the U.S. Yields on 10-year Treasuries rose one basis point to 2.34 percent as gold slid.
The dollar has rallied and equities reached record levels last week as data reinforced the health of the U.S. economy in comparison to other nations. While the Federal Reserve ended its bond buying program, fueling speculation it will raise benchmark interest rates next year, Japan and the euro area are still ramping up stimulus to ignite lackluster growth. American manufacturing grew at a faster pace than estimated last month, while factory gauges for China and the euro zone retreated.
“All arguments are in favor of the dollar,” said Lutz Karpowitz, a senior currency strategist at Commerzbank AG in Frankfurt. “It’s very clear that the Fed is the central bank that is relatively hawkish. We are seeing underlying dollar strength, and it’s justified.”Read the full story