The dollar held gains against major peers as signs of economic recovery supported the case for the Federal Reserve to normalize policy. New Zealand’s currency fell for a third day after producer prices declined.
The Bloomberg Dollar Spot Index rose from a two-week low before the Labor Department releases consumer-price data today and as Federal Reserve Chair Janet Yellen and central bankers prepare to meet at an annual conference in Jackson Hole, Wyoming. The euro held the biggest loss in almost two weeks before a report this week economists forecast will show manufacturing activity in the region slowed and amid speculation the European Central Bank will expand monetary stimulus.
“It’s all but certain the Fed will move before the ECB and the Bank of Japan, where the expectation is for more policy easing,” said Yujiro Goto, a currency strategist in London at Nomura Holdings Inc., Japan’s largest brokerage. “The policy divergence is a positive for the dollar, and I don’t expect the outlook to change this week.”
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