Dollar recovers on positive US business activities

US dollar received support on Wednesday from a survey that showed that US business activities recovered from a five-month contraction, and the Australian dollar also increased, boosted by the possibility of raising interest rates after the release of surprising data on rising inflation.

According to Reuters, the dollar index, which measures the performance of the US currency against a basket of six competing currencies, settled at 106.17, recovering from the lowest level in a week it reached in the previous session at 105.35.

Standard & Poor’s Global said on Tuesday that the Composite Purchasing Managers’ Index in the United States, which tracks the manufacturing and services sectors, rose to the highest level since July, giving the Federal Reserve more room to keep interest rates high.

The strength of the dollar kept the Japanese yen near the 150 level, which is closely monitored, and the Japanese currency was trading in the latest transactions at 149.84 to the dollar after trading was characterized by fluctuations over the past month and traders kept awaiting any indication of intervention from the Japanese authorities to support the currency.

The Australian dollar rose as much as 0.7% to touch a two-week high at $0.6400 on Wednesday after data showed that the consumer price index rose 1.2% in the third quarter, exceeding market expectations for a 1.1% rise and up from 0.8% in the previous quarter.

The British pound also rose 0.13%, recording $1.2175, and the New Zealand dollar increased 0.1% to $0.58505.