The euro gave up some of its early gains against the dollar on Monday after a jump on short covering, while the greenback rose against the yen as traders expect U.S. jobs data this week to show an improvement in the labour market.
The dollar climbed against the Swiss franc, aiding the euro’s advance versus the Swiss currency as traders were forced to close short positions in both the greenback and the european single currency, traders said.
“The dollar looks to have room to rise this week with key U.S. economic data, especially ahead of the payrolls report, which is expected to show growth and could be symbolic,” said Kosuke Hanao, head of Treasury product sales at HSBC in Tokyo.
The dollar JPY= rose 0.1 percent from late New York trade on Friday to 92.66 yen, erasing earlier losses on selling by Japanese exporters before the fiscal year-end on Wednesday.
The dollar index .DXY was down 0.2 percent at 81.513, but recovering from earlier lows.
U.S. non-farm payrolls data is due out on Friday. The consensus is for a gain of 190,000 jobs in March, the second month of jobs growth since the recession started in December 2007, and the largest increase since March of that year. [ID:nN26149991].
“The influential U.S. payrolls report for March is likely to show a steep rise in job creation this week, though it is mainly a ‘snap back’ from the snow-storm-induced fall in February,” said Joseph Capurso, currency strategist at Commonwealth Bank.
The dollar climbed 0.8 percent to 1.0677 francs CHF= and the euro rose 0.5 percent to 1.4355 francs EURCHF=.
The euro earlier added to the gains it made late last week after euro zone leaders approved a safety net for debt-laden Greece.
Traders said the euro’s EUR= charge as high as $1.3530 in early trade came as stops above $1.3430, $1.3450 and $1.3500 were triggered in thin volumes.
While there was no news driving the euro higher, the market has been sitting on record short positions and some of that got squeezed on Monday. [IMM/FX].
The single currency had gained over 1 percent Friday, with some investors rushing to cover short positions in the euro/Australian dollar EURAUD= and euro/yen EURJPY=R pairs.
But as the morning progressed, the euro eased back to $1.3440 without getting to test resistance around $1.3570, which was the intra-day high on March 22 and 23.
Still, some thought the bounce could have wings.
“For the next month, the euro looks to have cleared a breathing space,” JP Morgan said in a report.
“Greece has secured its backstop from Europe and should proceed with its fiscal program. The sceptics may be right long-term, but for the next month, we suspect the euro will edge higher.”
Last week, euro-zone policy-makers agreed on an aid package under which Greece would receive both bilateral loans from euro-zone partners and funding from the International Monetary Fund if it faced severe difficulties. [ID:nLDE62N2R1]
While the plan is seen as a short term positive for the euro, longer-term worries about Greece and other fiscally vulnerable economies in the region, such as Portugal and Spain, remain.
Concerns about Greece’s fiscal health have driven the euro down more than 6 percent versus the dollar this year.
The Australian dollar AUD=D4 rose 0.4 percent to $0.9078 as hawkish comments from Reserve Bank of Australia Governor Glenn Stevens on Monday helped sentiment.
Stevens said interest rates had been too low and could not remain at previous levels.
source: reuters.com
