Dollar rally signals improving economy

THE dollar rose to a seven-day high against the euro in New York trading as signs the world’s biggest economy is strengthening lured investors to US assets such as stocks and corporate bonds.

Comments by President George W Bush, in which he said a weakening dollar is “contrary to our policy”, also boosted the dollar. The gains cut into a tumble that has driven the dollar down 20% against the euro in the past 12 months, which has bolstered US manufacturers and hurt European companies. A US industry group’s factory index, released yesterday, rose more in May than analysts forecast.

Evidence of an improving US economy is “in stark contrast to the numbers out of Europe”, said Robert Sinche, chief currency strategist at Citigroup Inc.