The U.S. dollar recovered against a basket of major currencies on Thursday on the view that Wednesday’s selloff was overdone given the relative strength of the U.S. economy and the Federal Reserve’s commitment to tightening U.S. monetary policy.
A disappointing auction of Spanish debt and data showing deflation hit five peripheral euro zone countries in September underscored the relative health of the U.S. economy and the divergence between the Fed’s path toward hiking interest rates and the European Central Bank’s potential to further loosen monetary policy.
The dollar gained traction after hitting a three-week low against the euro and the Swiss franc Wednesday and a more than one-month low against the safe-haven yen.
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