Investing.com – The dollar rose against a basket of major currencies on Tuesday buoyed by a pair of economic reports that topped expectations lifting investor optimism on the outlook for the U.S. economy.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.09% to 93.80.
Investor optimism grew on the outlook for a solid quarter of U.S. economic growth after data showed services and manufacturing activity rose more-than-expected this month.
The Markit ‘flash’ US Manufacturing Purchasing Managers‘ Index (PMI) rose to 54.5 in October, from a reading of 53.1 in September, beating economist forecast of a reading of 53.5.
Services growth, meanwhile, continued to remain steady amid an uptick in staff hiring and business optimism during October. The ‘flash’ US Services Business Activity Index increased to 55.9, topping expectations for a reading of 55.6.
The duo of upbeat manufacturing report helped offset an earlier wobble in the greenback amid speculation concerning the appointment of the next head of the Federal Reserve.
President Donald Trump said last week that he is considering three main candidates to lead the Federal Reserve Board: Current Fed chair Janet Yellen, Federal Reserve Governor Jerome Powell, and Stanford University economist John Taylor.
Taylor and Powell are rumoured to be leading the race for the chance to lead the Federal Reserve when Yellen’s term ends in February.
Vice President Michael Pence, however, met with former Fed board governor Kevin Warsh about the Fed chair position last week, The Wall Street Journal reported on Monday, adding that Pence has been part of small group of senior White House officials who have been vetting candidates.
The uptick in the dollar weighed on sterling which dropped 0.48% to $1.3135 amid after Bank of England deputy governor Jon Cunliffe said the first hike is still an “open question”, reducing investor expectation of a rate hike in November.