NEW YORK (MarketWatch) — The U.S. currency gained ground on the yen and the euro Tuesday, cementing the strongest quarterly rise for the ICE dollar index since a haven-inspired surge into the greenback during the height of the financial crisis.
The index DXY, +0.35% rose 0.4% to 85.916. The index, which measures the dollar against six major rivals, posted a 7.7% quarterly rise, the largest since a 9.6% jump in the third quarter of 2008, according to FactSet data.
The dollar’s surge has been credited with helping to undercut commodities, which have seen broad losses in September. A stronger dollar makes commodities priced in the currency more expensive to users of other currencies. See: An already ugly September for commodities just got real.
The dollar reversed early weakness versus the Japanese yen USDJPY, +0.00% to trade at ¥109.64 versus a level of ¥109.50 late Monday in New York. The euro EURUSD, -0.02% fell to $1.2631 from $1.2685, slipping as data showed annual euro-zone inflation fell to 0.3%, a five-year low.
“The latest inflation data suggests that price pressures in the region are non-existent as demand remains tepid and fears of disinflation begin to take hold. The figures are likely to put further pressure on [the European Central Bank] to begin an aggressive easing program in order to stimulate demand,” said Boris Schlossberg, managing director of FX strategy at BK Asset Management.
ECB policy makers meet on Thursday.
The currency market processed the last flows related to the settlement of commercial transactions by Japanese companies at the end of the fiscal first half earlier in the session.
Market participants might be set to wait in the wings ahead of the ECB meeting and U.S. manufacturing and jobs data later in the week. Market participants shrugged off disappointing Japanese economic data such as industrial production release in the morning as lacking in relative importance.
