The dollar fell on Thursday consolidating recent gains that pushed it to nearly three-year highs during the first quarter but the outlook remained upbeat in the wake of improving economic prospects backed by the Biden governments more than $2 trillion stimulus plan.
The dollar fell on Thursday consolidating recent gains that pushed it to nearly three-year highs during the first quarter but the outlook remained upbeat in the wake of improving economic prospects backed by the Biden governments more than $2 trillion stimulus plan.
Investors are now looking to Fridays non-farm payrolls report to confirm their positive view on the dollar and the economy.
The dollar gained 3.6% against a basket of six currencies in the first three months of the year its best quarterly performance since June 2018 with investors betting on a swift and robust economic recovery.
Were seeing the U.S. growth outlook just crushing Europes said Edward Moya senior market analyst at online FX trading platform OANDA.
The Biden administration is not even three months on the job and its about to deliver its second multi-trillion-dollar stimulus package. Well probably see the U.S. run hot and thats probably driving the rise in Treasury yields including the dollar.
U.S. President Joe Biden announced on Wednesday his long- awaited $2 trillion-plus job plan including $621 billion to rebuild infrastructure. a href=/business/autos-transportation/biden-kicks-off-effort-reshape-us-economy-with-infrastructure-package-2021-03-31/ read more
Meanwhile U.S. data showed strong growth prospects.
A report on the U.S. manufacturing sector showed a stronger-than-expected reading of 64.7 in March the highest in more than 37 years. That was offset though by slowing construction spending which fell 0.8% in February and an increase in U.S. jobless claims in the latest week. a href=/business/us-manufacturing-sector-index-races-37-year-high-march-ism-2021-04-01/ read more
In afternoon trading the dollar index slipped 0.3% to 92.933.
The dollar though slipped a bit after the jobless claims report with claims of 719000 in the week ended March 27. a href=/business/us-weekly-jobless-claims-unexpectedly-rise-2021-04-01/ read more
The dollar indexs gains in the first quarter came as the euro the biggest component in the index struggled on concerns the euro zones recovery is being hampered by a third wave of COVID-19 infections.
Frances President Emmanuel Macron ordered the country into its third national lockdown and said schools would close for three weeks. The euro zone also lags the United States in vaccination programs. a href=/business/healthcare-pharmaceuticals/france-orders-schools-closed-widens-covid-19-restrictions-2021-03-31/ read more
Sentiment toward Europe though received a boost when data showed euro zone monthly factory activity growth galloped at its fastest pace in the nearly 24-year history of a leading business survey.
The euro was last up 0.3% at $1.1768.
The dollar was down 0.1% against the yen at 110.61 yen after ending March with its biggest monthly gain since November 2016. It rose as high as 110.97 on Wednesday the highest in a year.
The U.S. non-farm payrolls report is the major data release this week with economists expecting an increase of about 650000 jobs in March.
Considering the recent price action the risk of a selloff in the U.S. dollar is elevated if the jobs report fails to meet expectations said Matt Weller global head of market research at FOREX.com and City Index.
In that scenario the beaten-down euro/dollar could have room to recover back toward its 200-day (exponential moving average) and the previous support level near $1.1830 through early next week.
In observance of Good Friday Reuters will not be putting out market reports during the European hours.
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Currency bid prices at 2:46PM (1846 GMT)
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