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Dollar buoyant as economic outlook brightens, doubts surround euro

ForexMar 26, 2021 05:35AM ET
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© Reuters. FILE PHOTO: A picture illustration shows U.S. 100 dollar bank notes taken in Tokyo

By Tom Wilson

LONDON (Reuters) - The dollar held near its highest since November against most major currencies on Friday, buoyed by hopes over improving U.S. economic data and the availability of coronavirus vaccines, while the euro recovered from heavy losses a day before.

Against a basket of six major currencies, the dollar stood at 92.793, not far off a four-month high hit a day earlier and on course for a weekly gain of 0.9%.

In further signs of strength, the dollar rose to 109.44 against the Japanese yen, its highest since June. Against the Swiss franc, it rose to its highest since July, holding onto a 0.5% gain from the previous session.

U.S. jobless claims fell to a one-year low last week and President Joe Biden said he will double his vaccination plan after reaching his previous goal of 100 million shots 42 days ahead of schedule, both of which support optimism in the dollar.

Data on U.S. personal consumption due later on Friday was also on traders' radars.

"The extent of the strength (of the dollar) is more because of Biden's stimulus package," said Derek Halpenny, head of research for global markets at MUFG.

A resurgence of COVID-19 cases in major economies such as the euro zone has also favoured, he added.

The dollar's gains in the past few weeks have been so rapid that some analysts are warning against chasing the dollar higher from current levels.

"We believe recent moves in FX markets are corrective and not part of a new 2021 trend," ING analysts wrote in a note.

The euro managed to come back from Thursday's four-month low, with the common currency bruised by doubts over the slow pace of vaccinations.

Against the euro, the dollar slipped 0.1% to $1.17630 but remained near its strongest level since November.

Germany's Ifo survey later on Friday is expected to show an improvement in business morale.

That's unlikely to halt the euro's slide, though. Worries about the European Union's slow vaccination rollout and bickering with former member Britain over vaccine exports have become a dominant theme, traders said.

A notable exception to the dollar's gains was the British pound, which gained 0.3% to $1.37735 after rising 0.4% on Thursday.

Dollar buoyant as economic outlook brightens, doubts surround euro
 

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