Dollar hits 4-week peak, sterling lower after BOE hike
By Samuel Indyk and Rae Wee
LONDON (Reuters) — The dollar touched a four-week peak against major peers on Thursday after upbeat labour market data a day earlier, while sterling remained lower after the Bank of England downshifted to a smaller 25 basis point hike.
Data out on Wednesday showed U.S. private payrolls rose more than expected in July, while plans by the U.S. Treasury to increase the size of government bond auctions in the third quarter pushed longer-dated U.S. Treasury yields higher and boosted the dollar.
«In a world where the U.S. continues to perform and avoids a hard landing while the rest of the world is struggling, it's an environment which is going to keep the dollar elevated,» Barclays (LON:BARC) FX strategist Lefteris Farmakis said.
The dollar index, which measures the currency against six major peers, rose as high as 102.84, its highest level in four weeks. It was last little changed at 102.60, after Wednesday's 0.5% gain.
The closely watched U.S. nonfarm payrolls report is due on Friday.
A fresh wave of risk aversion after rating agency Fitch downgraded the U.S. government's top credit rating could have resulted in some safe-haven buying, others said, which paradoxically also lent support to the dollar.
Sterling meanwhile fell as much as 0.7% to $1.2620, its lowest level since June 30 after the BOE opted to raise its key bank rate by 25 basis points, following an unexpected half-point move in June.
«The relative disparity in the trajectory of future monetary policy, against a backdrop of better-than-expected economic growth data, has catalysed a rally in the UK pound this year,» said John Leiper, Chief Investment Officer at Titan Asset Management.
«But momentum has dwindled recently, following the
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