The dollar rose to a seven-week high after an Israeli missile test raised concern that conflict in the Middle East was escalating amid the prospect of U.S. intervention in Syria, boosting demand for haven assets. The greenback rose for a fifth day versus the euro on speculation the Federal Reserve will start reducing monthly bond purchases, known as quantitative easing, this month. U.S. factory output rose in August, according to the median estimate of economists surveyed by Bloomberg. Australia’s dollar rose after the nation’s Reserve Bank held its benchmark rate unchanged. Indonesia’s rupiah slipped to a more-than-four-year low. “Dollar strength is definitely a combination of concerns over Syria and expectations of tapering,� Christian Lawrence, a foreign-exchange strategist at Rabobank International in London, said in a telephone interview. “We’re still structurally bullish on the dollar on the back of QE tapering.� The Bloomberg U.S. Dollar Index, which tracks the greenback against 10 other major currencies, gained 0.1 percent to 1,036.59 at 9:04 a.m. in New York, after touching 1,037.46, its strongest level since July 16. The U.S. currency appreciated 0.1 percent to $1.3179 per euro after climbing to the highest level since July 22. The greenback increased 0.2 percent to 99.54 yen. Japan’s currency was dropped changed 0.1 percent to 131.18 per euro. Aussie, Pound Australia’s dollar rose after the nation’s Reserve Bank held its benchmark rate unchanged at 2.5 percent and refrained from signaling further monetary easing. The decision was in line with estimates of all 32 economists in a Bloomberg survey. The Aussie gained 0.6 percent to 90.35 U.S. cents after rising 0.8 percent to the strongest in more than a week. It climbed 0.9 percent to 89.94 yen, the highest since Aug. 19. The pound climbed to the strongest level in 15 weeks against the euro as Markit Economics and the Chartered Institute of Purchasing and Supply said a gauge of U.K. construction increased. Sterling gained 0.2 percent to 84.70 pence per euro, after touching the strongest level since May 21. It rose 0.1 percent to $1.5559. The rupiah weakened beyond 11,000 per dollar for the first time since 2009 on concern Indonesia will struggle to rein in a record current-account gap. The rupiah slid 0.8 percent to 11,065 per dollar, the weakest level since April 2009, prices from local banks compiled by Bloomberg show. Syria Tension President Barack Obama is seeking congressional approval to strike Syria for what his administration says was a sarin gas attack last month by the government in Damascus. Republican Senators John McCain of Arizona and South Carolina’s Lindsey Graham urged fellow lawmakers to back use of military force, while saying the president has yet to fully explain his strategy. A missile launch detected by Russia’s tracking system was a test, the Israeli Defense Ministry said. “It’s a reminder that we live with uncertainty about how events in the Middle East will play out,� said Kit Juckes, a global strategist at Societe Generale SA in London. The Institute for Supply Management’s U.S. factory index was 54 in August, a third month of expansion, and compared with a two-year high of 55.4 in July, economists forecast before the release of the data today. The Fed, which purchases $85 billion a month in Treasury and mortgage debt, will reduce the amount at its next meeting on Sept. 17-18, according to 65 percent of economists in an Aug. 9-13 Bloomberg survey. China PMI China’s non-manufacturing Purchasing Managers’ Index (CPMINMAN) was 53.9 last month from 54.1 in July, data showed today. A reading above 50 indicates expansion. Japan’s currency earlier dropped to the lowest versus the dollar since Aug. 2 as signs of economic improvement around the globe damped demand for refuge assets while data from the Bank of Japan signaled progress in the central bank’s easing efforts. The BOJ said Japan’s monetary base expanded 42 percent in August from a year earlier, the biggest gain since November 1973, to 177 trillion yen. The central bank buys more than 7 trillion yen of Japanese government bonds every month to increase the gauge of the supply of money to 270 trillion yen by the end of 2014 and stoke 2 percent inflation. BOJ policy makers are due to meet this week. “We are seeing people pull out of the yen,� said Eimear Daly, a currency-market analyst at Monex Europe Ltd. in London. “As soon as we get some more clarification on Japanese fiscal policy the yen will decline further. What we’re seeing come out of China and the euro zone� is also weakening the currency, she said. The yen is likely to weaken to 110 per dollar within the next 12 months, Daly said. To contact the reporter on this story: Joseph Ciolli in New York at jciolli@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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