Dollar climbs on strong U.S. economic data

The dollar recovered from two-year lows on Wednesday as U.S. data showed strong manufacturing activity, while the euro fell from its highest levels since 2018.

U.S. manufacturing activity rose to a near two-year high in August amid a surge in new orders. Chinese and European manufacturing indicators also reported upbeat data.

The dollar index rose 0.12% to 92.346 after hitting its lowest level since April 2018. The dollar has been falling since last week after the Federal Reserve announced a policy shift into inflation and higher employment. The Fed’s inclination to keep U.S. interest rates lower for longer prompted dollar traders to a selloff.

The euro rose on the dollar’s initial sell-off and hit $1.2014, its highest since mid-2018. However, the single currency reversed its gains and last traded at $1.19095. 

Against the Japanese yen, the dollar steadied at 105.75. The Aussie bought $0.73845 and the kiwi stood at $0.6764. 

The British pound traded at $1.3422, right below last year’s high. In offshore trade, the Chinese yuan sat at 6.8266 against the dollar.