Dollar headed for best week in three months By Reuters

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© Reuters.

By Ritvik Carvalho and Kevin Buckland LONDON (Reuters) – The dollar headed for its best weekly gain in three months on Friday, fueled by growing confidence that the US economic recovery will outpace its global peers. He hit a two-month high in Asian trade amid signs of resistance in the labor market, and US non-farm payroll figures pulled out in early London deals. The US dollar also renewed highs against the euro and the yen during Asian trade, although both currencies recovered their losses in European trade. “The US economy is exceptionally strong relative to other countries, causing a short hedge of the dollar,” said Tohru Sasaki, head of Japan market research at JP Morgan in Tokyo, pointing to the employment and manufacturing indicators, as well as the rate of vaccines. The current outbreak of dollar strength could continue for “several weeks,” he said, but the outlook is darker thereafter as Europe and Asia catch up on immunizations and the Federal Reserve’s continued ultra-light monetary policy. limits an increase in US yields in the long run. . The dollar index touched 91.60 for the first time since December 1, before falling back to 91.375 at 0853 GMT. The indicator is up every day this week and is on track for a 1.1% weekly advance, the highest since November 1 and is based on a 0.3% rise the week before. Charts: Ongoing Dollar for Best Week in 3 Months – https://fingfx.thomsonreuters.com/gfx/mkt/jbyprnzqrpe/dollar.png The dollar has been supported by a rise in US Treasury yields. US traders positioned for massive tax spending. Democrats in the U.S. Senate were poised for a marathon voting session aimed at overriding Republican opposition to President Joe Biden‘s $ 1.9 trillion COVID-19 relief proposal. ING strategists said there was a weakening correlation in the dollar with equity markets, although it was difficult to explain. They noted that while US Treasury yields have recovered in the past week, they have been matched by an equivalent increase in German bonds. “And certainly, the implementation of vaccination in the US seems much more impressive than in Europe, although the annual gains to date in the US (+ 3.08%) only marginally exceed those of the Eurostoxx 50 ( + 2.52%) “, they said. “The short-term positioning of the dollar probably plays a big role here and it would look vulnerable again if some of today’s non-farm jobs data were received positively.” Analysts and investors are weighing whether the strength of the dollar this year is a temporary position adjustment after a 7% drop for the dollar index in 2020, or a more enduring reversal of dollar pessimism. There are potentially a lot of dollar shorts to hedge, particularly against the yen, where hedge funds had amassed their biggest bearish bets since 2016. The dollar was down 0.2% to 105.36 yen on Friday after rising up to 105.70 for the first time. time since October 20. The euro was up 0.2% at $ 1.1981 after falling to $ 1.1952, a level not seen since Dec. 1.

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