Upbeat U.S. data lift dollar index to two-month high

Thu Oct 6, 2016 3:04pm EDT
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By Richard Leong

NEW YORK (Reuters) - The dollar rose against a basket of currencies on Thursday to its strongest level in two months as encouraging data on U.S. jobs reinforced the view the Federal Reserve would raise interest rates at the end of the year.

Sterling on the other hand fell to a 31-year low versus the greenback on renewed anxiety about the repercussion from Britain's "hard" exit from the European Union.

First-time filings for U.S. jobless benefits unexpectedly fell to a near 43-year low, the U.S. Labor Department said.

On Friday, the government's payrolls report is due at 8:30 a.m. (1230 GMT) in which analysts polled by Reuters forecast a hiring of 175,000 workers in September. ECONUS

On Wednesday, the Institute for Supply for Management's U.S. services activity index posted a record monthly rise in September to its highest level in 11 months.

"It looks like the U.S. economy is righting itself at the end of the third quarter," said Christopher Vecchio, currency analyst at DailyFX in New York.

The growing spread between U.S. and German bond yields has also bolstered the greenback. The difference between two-year U.S. and German government debt was 1.52 percentage points on Thursday, its widest in a decade. US2YT=RR DE2YT=RR

The dollar index was last up 0.55 percent at 96.658 after touching its highest level since late July. .DXY   Continued...

Light is cast on a U.S. one-hundred dollar bill next to a Japanese 10,000 yen note in this picture illustration shot February 28, 2013. REUTERS/Shohei Miyano/Illustration/File Photo