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US dollar at 5-year low vs pound; rises vs yen, euro

Fresh records in the US equity market lifted the dollar against the euro and the yen, but the greenback fell to a new five-year low against the British pound.

NEW YORK: Fresh records in the US equity market on Tuesday lifted the dollar against the euro and the yen, but the greenback fell to a new five-year low against the British pound.

The Dow Jones Industrial Average and S&P 500 bolted to new closing records following a batch of strong US auto sales for June and a report on US manufacturing activity.

The closely-watched Institute for Supply Management's manufacturing purchasing managers index (PMI) dipped 0.1 point to 55.3 in June. The number was the second-highest for manufacturing activity so far this year, after May's 55.4 peak.

The surge in US equities came ahead of a meeting Thursday of the European Central Bank, which is expected to maintain the policy status quo after an unprecedented package of stimulus measures taken last month.

Meanwhile, a Bank of Japan report showed business confidence among large manufacturers for the April-June quarter stood at 12, well short of market expectations, after hitting a more than six-year high of plus-17 in the preceding quarter.

The Bank of Japan "would have probably liked to see a stronger report, but the latest numbers should not affect their steady monetary policy stance," said BK Asset Management analyst Kathy Lien.

Meanwhile, Lien cited a surprising June rise in the British manufacturing PMI to 57.5 as the catalyst for five-year high in the pound against the dollar.

"While economists had been looking for activity to weaken, this latest report increases the pressure on the BoE (Bank of England) to tighten," Lien said.

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