Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Dollar extends four-month high against euro as recovery outlooks diverge

ForexMar 25, 2021 01:05AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. U.S. One dollar banknotes are seen in front of displayed stock graph in this illustration taken

By Kevin Buckland

TOKYO (Reuters) - The dollar hit a fresh four-month high against the euro on Thursday as the U.S. pandemic response continued to outpace Europe's, which has been hobbled by extended lockdowns and delayed vaccine rollouts.

The safe-haven greenback held on to most of a broad two-day advance, which has been fuelled by worries ranging from Europe's third COVID-19 wave and potential U.S. tax hikes to the persistent spectre of inflation.

Even Germany's reversal of a call for a strict lockdown over the Easter period did little to build confidence in the region's economic outlook, instead compounding discontent with Chancellor Angela Merkel's handling of the pandemic.

"The weak point in Europe remains around the vaccine rollout amid the rise in new virus cases and the tightening of restrictions ... which likely means the mooted acceleration in Q2 may have to be pushed back by a quarter," Tapas Strickland, director of economics and markets at National Australian Bank, wrote in a client note.

"The narrative of the U.S. outperforming Europe in the coming quarter remains."

The euro traded near the four-month low of $1.1809 touched earlier in the Asian session, while a gauge of the dollar against six major peers hovered just below a four-month high of 92.617 reached overnight.

The dollar gained 0.2% to 108.905 yen, another safe-haven currency, as the pair continued to consolidate below 109.

At the same time, the dollar's rally showed some signs of fatigue, as some of its bruised rivals recovered from lows amid gains in many Asian equity markets.

Australia's dollar, considered a liquid proxy for risk appetite, bounced 0.3% after earlier dipping to $0.7579, the lowest level since Feb. 2.

The British pound rose 0.2%, climbing out of a six-week trough at $1.3675.

Meanwhile, benchmark 10-year Treasury yields consolidated around 1.6%, a week after hitting a more than one-year top of 1.754%, which had also supported the dollar.

"The U.S. longer-term Treasury yield is lower than the previous week’s level, and that is a very big factor for the improvement in market sentiment," said Minori Uchida, chief currency analyst at MUFG Bank.

"Even if the yield is 1.6 or 1.7%, it is not enough to push up the dollar constantly."

On Wednesday, U.S. Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell expressed their confidence in the U.S. recovery during a second day of testimony to Congress.

Yellen told Senate lawmakers she was open to banks buying back stock and paying dividends, an updated view showing her confidence in the economy. Powell also said he thinks 2021 will be a "very, very strong year in the most likely case."

A day earlier, though, the treasury secretary had put investors on alert after espousing tax hikes to pay for President Joe Biden's plans for upgrading infrastructure and other investments.

Inflation could also rear its head as disruptions in the supply chain exert cost pressures for manufacturers, with U.S. factory activity picking up in early March.

Meanwhile in Europe, an unexpected expansion of business activity did little to brighten the mood, with renewed COVID-19 lockdowns in many of the bloc's member nations meaning the gains may not last through April.

Concerns have been magnified because the third wave of infections is being largely driven by the U.K. strain of the virus, according to Commonwealth Bank of Australia (OTC:CMWAY) strategist Kim Mundy.

"The risk is that the more contagious and deadly strain of the virus elicits a stronger response from European governments, which sees Europe remaining locked down for longer," she wrote in a note.

"A significant delay to Europe's re‑opening efforts will only widen the divergence between the economic outlook in Europe and the U.S.," putting additional pressure on the euro, she said.

In cryptocurrencies, bitcoin continued to swing widely, falling below $52,000 again in early Asian trading before recovering to around $52,123.

That is after briefly topping $57,000 overnight after Tesla (NASDAQ:TSLA) Inc boss Elon Musk said customers can now buy the company's electric cars with the digital token.

Bitcoin hit a record high of $61,781.83 on March 13.

========================================================

Currency bid prices at 400 GMT

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar

$1.1823 $1.1815 +0.07% -3.23% +1.1828 +1.1804

Dollar/Yen

108.8850 108.6800 +0.21% +5.44% +108.9770 +108.7500

Euro/Yen

128.74 128.42 +0.25% +1.43% +128.8300 +128.4300

Dollar/Swiss

0.9354 0.9358 -0.06% +5.71% +0.9365 +0.9352

Sterling/Dollar

1.3699 1.3680 +0.17% +0.30% +1.3707 +1.3680

Dollar/Canadian

1.2569 1.2582 -0.08% -1.28% +1.2588 +1.2566

Aussie/Dollar

0.7603 0.7581 +0.30% -1.16% +0.7613 +0.7579

NZ

Dollar/Dollar 0.6976 0.6961 +0.21% -2.86% +0.6985 +0.6960

All spots

Tokyo spots

Europe spots

Volatilities

Tokyo Forex market info from BOJ

Dollar extends four-month high against euro as recovery outlooks diverge
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (3)
Brian Springer
Brian Springer Mar 24, 2021 10:58PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
euro heading higher also, $ to 9400
Notvery Goodathis
Peteymcletey Mar 24, 2021 10:22PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
luckily Trump pushed operation warp speed along. yet biden takes all his credit.
Allatra Yiveh
AllatraYiveh Mar 24, 2021 9:41PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
dollar extends blabla... as (pick any random reason here)...
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email