US Dollar gets lift from rising Treasury yields, weak eurozone data
Washington (May 4) Rising Treasury yields and a mixed reading on eurozone manufacturing activity helped lift the dollar against the currencies of major developed countries within the G-10 Monday, but it traded lower against several emerging-market rivals.
The yield on the 10-year Treasury finished the session at its highest closing level in about seven weeks. Rising Treasury yields have helped draw investors to the dollar, said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange.
The U.S. currency was little-changed after a report showed orders for goods produced at U.S. factories rose 2.1% in March, up from a 0.1% decline in February, but short of expectations for a 2.4% increase, according to a survey of economists conducted by MarketWatch.
Early in the global day, financial data provider Markit released its final reading on eurozone manufacturing activity in April. The data came in slightly better than expected by economists polled by The Wall Street Journal, but weak readings in France and Spain helped push the euro lower, said Boris Schlossberg, managing director of FX strategy at BK Asset Management, in a note to clients.
Trading remained relatively quiet Monday, Schlossberg said, with many traders in the U.K. and Japan on vacation.
Esiner said that strong U.S. economic data released toward the end of last week was helping to boost the dollar, as early signs that the economy has bounced back in the second quarter increased the likelihood that Federal Reserve policy makers will raise interest rates at their June or September meeting, a move that most expect would boost the dollar.
The euro EURUSD, -0.46% traded at $1.1151, compared with $1.1201 Friday. The pound GBPUSD, -0.12% traded at $1.5118, compared with $1.5139. The dollar USDJPY, -0.06% traded at ¥120.14, compared with ¥120.18. The Australian dollar AUDUSD, -0.17% traded at 78.37 cents, compared with 78.51 cents. The Canadian dollar CADUSD, +0.55% traded at 82.68 cents, compared with 82.25 cents.
Meanwhile, the dollar weakened against the Mexican peso MXNUSD, +0.76% and the Russian ruble USDRUB, +0.54%
Esiner attributed the dollar’s weakness against its emerging-market rivals to a Chinese manufacturing report that was weaker than economists had expected.
“Bad data in China now equals more stimulus, so that might be supporting some EM names,” Esiner said.
The ICE U.S. Dollar Index DXY, +0.17% a measure of the dollar’s strength against a basket of six rivals, was 0.1% higher at 95.4400.
Earlier in the session, Thailand’s baht THBUSD, -0.30% fell to a five-year low against the dollar Monday after the Bank of Thailand cut interest rates last Wednesday.
Traders were looking ahead to Friday’s nonfarm payrolls report for April, expected Friday.