Trading
Dollar holds gains on better U.S. outlook vs Europe
Published by linker 5
Posted on February 3, 2021
Global Banking and Finance Review
Company
Global Banking and Finance Review is an online platform offering news, analysis, and opinion on the latest trends, developments, and innovations in the banking and finance industry worldwide. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.
Published by linker 5
Posted on February 3, 2021
By David Henry
NEW YORK (Reuters) – The dollar rose to two-month highs against the euro on Tuesday as markets saw the U.S. as likely to rebound sooner than Europe from the coronavirus pandemic.
The view was bolstered by moves in Washington toward more stimulus spending that contrasted with European lockdowns and expectations for a decline in euro zone GDP in the first three months of this year.
Against the dollar, the euro was trading at $1.202 in the afternoon in New York afternoon, down almost to an early December low, and off 0.32% for the day as well as down 1.61% for the year.
“Growth differentials are taking a toll on the euro and adding to the traction that we’ve seen for the U.S. currency this year,” said Joe Manimbo, senior market analyst at Western Union Business Solutions.
“Europe might be about a year behind the U.S. in terms of a full recovery,” he said.
The dollar index gained 0.25% as U.S. and European stock indexes rose global stocks rose nearly 2% and oil jumped 2% to the highest levels in a year.
Initial European Union economic readings showed the euro zone contracted less than expected in the fourth quarter of 2020 but suggested that a steeper decline in the first quarter of this year.
Those concerns were amplified after retail sales in Germany, Europe’s biggest economy, plunged by more than forecast in December, according to data on Monday.
“Things are looking even more depressing here,” Commerzbank strategists said in a daily note.
Supporting the dollar on Tuesday were steps by Democrats in Congress toward fast-track passage of U.S. President Joe Biden’s $1.9 trillion COVID-19 relief package even without Republican support.
The dollar has also benefited from a massive bout of short-covering, especially against the yen, where hedge funds had racked up their biggest short bets against the greenback since October 2016.
Against the yen, the dollar hovered above 105 yen after briefly crossing the level on Monday for the first time since mid-November.
Many see the dollar’s rebound since early last month as a correction after a relentless decline – the dollar index lost almost 7% in 2020 – on expectations of a global recovery from the pandemic with massive fiscal spending and continued ultra-easy monetary policy.
Still, Manimbo said the dollar’s move may be short-lived.
“If the U.S. can start to see better labor market data, that would make for a more convincing rally,” he said.
The next monthly U.S. payroll report is due on Friday.
Graphic: World FX rates https://graphics.reuters.com/GLOBAL-CURRENCIES-PERFORMANCE/0100301V041/index.html
Graphic: USD positions https://fingfx.thomsonreuters.com/gfx/mkt/jbyprnwqkpe/USD%20positions.JPG
(Reporting by David Henry in New York and Saikat Chatterjee in London; Editing by Mark Heinrich)