Dollar Up, Gains Against Yen and Euro Over Strengthening U.S. Economic Recovery

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By Gina Lee

Investing.com – The dollar was up on Monday morning in Asia, hovering near record gains against the euro and yen. Investors turned to the dollar thanks to the previous week’s U.S. economic data and the quickening pace of the U.S. COVID-19 vaccine program.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.10% to 92.812 by 9:54 PM ET (1:54 AM GMT).

The USD/JPY pair inched up 0.01% to 109.66. The yen was not far from strong resistance and Friday's 10-month low of 109.85 against the dollar, as it is sensitive to gaps in returns on U.S. and Japanese government debt.

The U.S. economic recovery has seen a 76-basis-point rise in 10-year Treasury yields in 2021, the biggest since February 2020. The rise drew in Japanese investors, in turn pushing the yen down near 6% in the quarter to date.

The AUD/USD pair inched down 0.08% to 0.7629 and the USD/NZD pair inched down 0.10% to 0.6984.

The USD/CNY pair inched up 0.03% to 6.5433, with Chinese manufacturing and non-manufacturing purchasing managers index (PMI) figures due later in the week.

The GBP/USD pair inched down 0.06% to 1.3777.

The euro traded at $1.1788, close to the previous week’s four-and-a-half-month low, and was headed for its worst month since mid-2019. Supply issues and safety concerns hampering Europe’s COVID-19 vaccine rollout, alongside rising case numbers, led investors to remain heavily long euros, according to positioning data.

Meanwhile, the U.S. has doubled its vaccination goal after meeting its 100-million-shots goal more than a month ahead of schedule.

"The U.S. is also being helped on its own by some pretty good economic data, the fantastic rollout of vaccines, good pace of vaccination and (positive) stock markets... the domestic economy is doing better than expected and that is likely to be the case for the next few months, so that might hold the U.S. dollar up and that's what's caused the AUD, NZD and emerging-market currencies to pull back in March,” Westpac currency analyst Imre Speizer told Reuters.

Investors will also be watching U.S. jobless claims data, due later in the week, after the number of claims fell to a one-year low during the previous week.

"The distribution of forecasts range from 460,000 to 1 million (jobs), where the whisper number sits at the top end of the range... one million jobs would set the reflation trades alight, with the S&P500 outperforming, led by cyclicals and cause a solid sell-off in bond yields taking USD/JPY and USD/CHF higher," Pepperstone head of research Chris Weston told Reuters.

"The euro should push through the previous week’s lows of 1.1761 and towards 1.1690," Weston added.