The dollar surged in late trade after strong economic data prompted a 17-month high for US stocks on renewed hopes about fourth quarter growth. The Institute for Supply Management reported that factory activity in the US grew in October for the fourth consecutive month. Today's gains echo those made last week, when the dollar was buoyed by strong Q3 US GDP numbers and toned down rhetoric by US Treasury Secretary John Snow on the Asian currency situation. The effect of today's data was to more than offset the gains the euro had enjoyed earlier in the session on the back of strong manufacturing data. At 1700, the euro was down at USD1.1452. Against sterling it was down at STG0.6818.
The next major move in euro/dollar will depend largely on this Friday's payrolls report in the US, analysts said, noting that if payrolls surprise everyone with a negative print then the euro could rise to USD1.18. But analysts still think the dollar could gain further in the short term with cyclical recovery hopes more than offsetting the impact of structural negatives, primarily to do with the twin US deficits. //www.fxcentre.com