Dollar dominates currency markets

A sharp rise in the dollar pushed the yen to a 10-month low on Thursday and kept the euro and sterling near three-month lows as investors put their full faith in the still-strong US economy despite the bleak global growth outlook.

The dollar rose to a new peak at 147.875 yen in early Asian trading, the highest level since November.

Against a basket of currencies, the dollar index rose 0.05 percent to 104.91, holding on to some of the gains it made during the previous session, after climbing to a six-month peak, with the US service sector recording strong momentum in August unexpectedly.

The euro fell in the latest trading by 0.09 percent, recording $1.0718, after falling to its lowest level since June on Wednesday. The British pound fell 0.06 percent to $1.2500 after falling to its lowest level in three months in the previous session.

Data on Thursday showed that Chinese exports fell in August by 8.8 percent compared to their level a year ago, and imports contracted by 7.3 percent, which is slightly better than economic expectations, with a decline of 9.2 percent and 9.0 percent, respectively.

These data did not help the Australian dollar, which fell 0.2 percent, recording $0.6370, while the New Zealand dollar was trading at $0.5871, thus hovering the two currencies near their lowest levels in ten months.

The yuan fell in internal trading to a new low in ten months to 7.3252 against the dollar.

In Japan, traders continued to anticipate possible intervention, with the yen facing great difficulties in rising against the strong dollar, even as officials intensified their warnings of the consequences of a wave of currency selling.

In the latest trading, the yen recorded 147.66 against the dollar.