FOREX-Dollar set for best week in three months as pandemic recoveries diverge

Published 05/02/2021, 01:54
Updated 05/02/2021, 02:00
© Reuters.
DX
-

* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

By Kevin Buckland
TOKYO, Feb 5 (Reuters) - The dollar headed for its best
weekly gain in three months, lifted by growing confidence that
the U.S. economic recovery will outpace global peers.
The dollar index =USD was just shy of the two-month high
reached overnight amid signs of resilience in the labour market,
with closely watched nonfarm payroll figures due Friday.
"The U.S. economy is exceptionally strong relative to other
countries, causing dollar short covering," said Tohru Sasaki,
J.P. Morgan's head of Japan market research in Tokyo, pointing
to employment and manufacturing indicators as well as the pace
of vaccinations.
The current bout of dollar strength could continue for
"several weeks," he said, but the picture is murkier thereafter
as Europe and Asia catch up with immunizations and the Federal
Reserve's continued ultra-easy monetary policy caps a rise in
long-term U.S. yields.
The dollar index was little changed at 91.529 early in the
Asian session after climbing every day so far this week, and
touching 91.581 on Thursday for the first time since Dec. 1.
The gauge is on track for a 1.1% weekly advance, the most
since Nov. 1, building on a 0.3% rise the previous week.
The greenback got support from a rise in longer-term U.S.
Treasury yields, which came as traders positioned for a massive
fiscal spending package. Democrats in the U.S. Senate were poised for a marathon
"vote-a-rama" session aimed at overriding Republican opposition
to President Joe Biden's $1.9 trillion COVID-19 relief proposal.
Analysts and investors are weighing whether dollar strength
this year is a temporary position adjustment after a 7% drop for
the dollar index in 2020, or a longer-lasting shift away from
dollar pessimism.
There are potentially a lot of dollar shorts to cover,
particularly against the yen, where hedge funds had racked up
their biggest bearish bets since 2016.
The dollar was little changed at 105.585 yen on Friday after
earlier pushing as high as 105.70 for the first time since Oct.
20.
The euro was mostly flat at $1.1966, maintaing its first
move below $1.20 since Dec. 1 from overnight.
Westpac strategists see Europe's vaccine rollout
accelerating by the end of this quarter, which, coupled with the
Fed's commitment to ultra-loose monetary policy, will put
pressure back on the dollar.
"DXY upside potential is living on borrowed time," they
wrote in a note, referring to the dollar index. "Sell DXY into
92."


========================================================
Currency bid prices at 8:54AM (054 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR=EBS !RIC !RIC !RIC !RIC !RIC !RIC
{EUR=EBS} is {EUR=EBS} {EUR=EBS} is {EUR=EBS} {EUR=EBS} {EUR=EBS}
invalid is invalid invalid% is is invalid is invalid
invalid%
Dollar/Yen JPY=D3 105.5320 105.5400 +0.00% +2.18% +105.6270 +0.0000
Euro/Yen EURJPY= 126.31 126.25 +0.05% -0.48% +126.3900 +126.2500
Dollar/Swiss CHF=EBS !RIC !RIC !RIC !RIC !RIC !RIC
{CHF=EBS} is {CHF=EBS} {CHF=EBS} is {CHF=EBS} {CHF=EBS} {CHF=EBS}
invalid is invalid invalid% is is invalid is invalid
invalid%
Sterling/Dollar GBP=D3 1.3682 1.3673 +0.08% +0.16% +1.3687 +1.3673
Dollar/Canadian CAD=D3 1.2823 1.2824 +0.00% +0.71% +1.2825 +1.2816
Aussie/Dollar AUD=D3 0.7598 0.7601 -0.01% -1.20% +0.7608 +0.7596
NZ NZD=D3 0.7156 0.7157 +0.03% -0.31% +0.7164 +0.7154
Dollar/Dollar


All spots FX=
Tokyo spots AFX=
Europe spots EFX=
Volatilities FXVOL=
Tokyo Forex market info from BOJ TKYFX

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
World FX rates https://tmsnrt.rs/2RBWI5E
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.