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The dollar appreciates in response to positive statistics from the United States

Image: Reuters Berita 24 English - The dollar strengthened against the euro on Wednesday, aided by encouraging economic statistics from the ...

Image: Reuters

Berita 24 English - The dollar strengthened against the euro on Wednesday, aided by encouraging economic statistics from the United States, and as the euro remained under pressure following the highest euro zone inflation on record, which raised concerns about the region's growth prospects.

The dollar rose 0.8 percent against the euro on Wednesday, extending Tuesday's gains, after statistics indicated that U.S. industrial activity increased in May, indicating that demand for goods remains strong, easing fears of an impending recession.

Separately, job postings in the United States dropped in April but remained at historically high levels.

"While headline job vacancies and quit rates remain at record highs, there are strong evidence that labor shortages in the hardest-hit sectors are reducing," Michael Pearce, a senior U.S. economist at Capital Economics, wrote in a note.

"This lends credence to the idea that a recession isn't required for labor market conditions to return to normal," Pearce said.

The good US data added to the pressure on the euro, which had been losing ground after Tuesday's data showed euro zone consumer inflation rising to new highs.

"The dollar has crept higher during the holiday weekend, bolstered by rising Treasury yields, while others sought refuge from growing global inflation," said Joe Manimbo, senior market analyst at Western Union Business Solutions.

Oil prices, which have just completed their sixth month of rises, the longest such stretch since 2011, are putting pressure on hopes that inflation has peaked.

"Oil being above $115 isn't instilling confidence that inflation is at or near a high," Manimbo added.

The latest boost to increased oil prices comes from news that European Union officials agreed in principle on Monday to reduce most oil imports from Russia by the end of the year.

In other news, the Australian dollar jumped 0.2 percent after statistics indicated the country's economy held up better than predicted in the first quarter, with robust domestic demand offsetting the impact of bad weather and a flood of imports, paving the way for future interest rate hikes to combat inflation.

The Canadian dollar rose to its highest level versus the US dollar in nearly six weeks after the Bank of Canada lifted its benchmark interest rate to 1.5 percent from 1.0 percent on Wednesday, the second consecutive 50-basis-point increase. It also stated that if necessary, it will act "more vigorously" to bring inflation back to target.

After a poll showing British manufacturing output rose at the slowest rate since January 2021, sterling fell 0.89 percent, causing investors to be concerned about a weakening growth outlook.

Bitcoin was down 5.2 percent at $30,126.36 in cryptocurrency trading, reversing four straight days of advances.

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