The ICE U.S. dollar index rose Wednesday to its highest level since March 2006 as the dollar rally gained momentum, spurred in part by a strong gauge of service-sector growth in the U.S. economy, ahead of a policy statement from the European Central Bank.
The dollar index DXY, -0.36% which measures the greenback’s value against a basket of six currencies, was up 0.34% to 88.94.
“The general trend of dollar strength has continued. Pullbacks in this rally have been short lived for the most part,” said Brian Daingerfield, a foreign-exchange strategist at RBS. “The appetite to be long dollars is still strong, and ahead of the much-anticipated ECB decision tomorrow we have the euro now at new multiyear lows.”
The Institute for Supply Management reported that growth increased at U.S. service sector companies in November, with a gauge of their activity rising to 59.3%, from 57.1% in October.
The euro EURUSD, +0.56% traded at $1.23, its lowest level since July 2012. It traded at $1.24 late Tuesday.
The ECB is expected to release a policy statement at 7:45 a.m. Eastern Thursday following the December meeting of its governing council. Investors are expecting an announcement of new easing measures, or a credible commitment to new easing measures in the future, Daingerfield said.
Elsewhere, the dollar USDJPY, -0.04% rose to 119.80 yen, its highest level since July 2007, as speculators drove the currency nearer to the psychologically significant ¥120 level. It traded at ¥119.22 late Tuesday.
The pound GBPUSD, -0.07% traded at $1.57 Wednesday afternoon, having recovered most of its losses from Tuesday’s session after U.K. Treasury Chief George Osborne said Wednesday he is planning additional austerity measures, like cutting welfare spending, during his closely watched Autumn Statement. The pound traded at $1.56 Tuesday.