By Saqib Iqbal Ahmed
NEW YORK (Reuters) - The U.S. dollar rose against the euro on Wednesday, helped by upbeat U.S. economic data, and as the common currency remained under pressure following the hottest euro zone inflation on record that raised worries about the region's growth outlook.
The dollar was about 0.8% higher against the euro, extending Tuesday's gains, after data on Wednesday showed U.S. manufacturing activity picked up in May as demand for goods remains strong, which could allay fears of an imminent recession.
Separately, U.S. job openings fell in April but remained at significantly high levels.
"While the headline job openings and quits rates remain close to record levels, below the surface there are clear signs that labour shortages are easing in the hardest-hit sectors," Michael Pearce, a senior U.S. economist at Capital Economics, said in a note.
"That provides some support for the idea that a recession is not necessary for labour market conditions to normalise," Pearce said.
The positive U.S. data put more pressure on the euro, which had been nursing losses following Tuesday's data, which showed euro zone consumer inflation soaring to a record.
"The buck has nudged higher since the holiday weekend, finding support from rising Treasury yields while others sought its safety from worsening global inflation," said Joe Manimbo, senior market analyst at Western Union (NYSE:WU) Business Solutions.
Hopes inflation might have peaked are being challenged by oil prices, which have just logged their sixth straight month of gains, the longest such streak since 2011.
"Oil holding at elevated levels above $115 isn’t inspiring confidence that inflation is at or near a peak," Manimbo said.
News that European Union leaders agreed in principle on Monday to cut most oil imports from Russia by the end of this year is the latest boost for higher oil prices.
Elsewhere, Australia's dollar rose 0.2% after data showed the country's economy held up better than expected in the first quarter as strong domestic demand offset the drag from dismal weather and a flood of imports, setting the scene for more inflation-fighting hikes in interest rates.
The Canadian dollar strengthened to its highest level in nearly six weeks against the greenback after the Bank of Canada on Wednesday raised its benchmark interest rate to 1.5% from 1.0%, its second consecutive 50-basis-point hike. It also said it was prepared to act "more forcefully if needed" to bring inflation back to target.
Sterling slipped 0.89%, with investors concerned about a deteriorating growth outlook, after a survey showed British manufacturing activity expanded in May at the weakest rate since January 2021.
In cryptocurrencies, bitcoin was down 5.2% at $30,126.36, pulling back after 4 straight sessions of gains.