Ben Levisohn and Ye Xie
Saturday, Dec 19th, 2009

The dollar touched a three-month high against the currencies of major U.S. trading partners as the Federal Reserve said the economy improved while reiterating it will keep borrowing costs low for an “extended period.”

The euro dropped against the pound as Greece’s credit rating was cut by Standard & Poor’s and the European Central Bank raised its estimate for writedowns in nations using the single currency by 13 percent. The dollar posted its biggest weekly rally since June before an economic report next week forecast to show an advance in U.S. durable goods.

[efoods]”This positive outlook from the U.S., from the Fed and much better data we have been recently seeing are giving you the impetus to get the euro-dollar lower,” said Emma Lawson, a currency strategist at Morgan Stanley in London, in an interview on Bloomberg Television.

The Dollar Index, which the ICE futures exchange uses to track the greenback against the euro, yen, pound, franc, Canadian dollar and Swedish krona, rose 1.5 percent to 77.721 this week, from 76.573 on Dec. 11, the biggest rally since the five days ended June 5. The index touched 78.141 yesterday, the highest level since Sept. 4.

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