Dollar on Monday at an eleven year peak against major currencies

The dollar rose on Monday against major currencies touching an 11-year peak. The Euro, which has been in an extended slump, had been up by as much as a third of a percent against the dollar but surrendered gains and traded near unchanged at just under $1.12.

The dollar rose on Monday against major currencies touching an 11-year peak. The Euro, which has been in an extended slump, had been up by as much as a third of a percent against the dollar but surrendered gains and traded near unchanged at just under $1.12.

The yen was off 0.45% at 120.07 yen to the dollar in New York trade. That marked a three-week high for the dollar against the yen.

“The dollar's long-term trend is up but it now is in some consolidation,” said Paul Christopher, international strategist at Wells Fargo in St Louis. “There is developing expectation Europe and Japan will improve their growth rates this year and that will narrow the lead for the US economy.”

The dollar has been steadily rising, largely because the US economic outlook is stronger than those of other big countries and bond buyers expect the Federal Reserve to soon start raising interest rates for the first time since 2006.

The Euro was higher against the dollar briefly on Monday on the back of marginally stronger economic numbers before the start of the European Central Bank's quantitative easing program later this month.

ECB policymakers meet in Cyprus on Wednesday and Thursday, just one of several central bank meetings that will be watched this week in global markets for interest-rate policy shifts. The ECB is expected to lay out more details of the program at a news conference on Thursday.

The US dollar also rose to as high as 95.505 against a basket of major currencies, its highest level since September 2003. It last traded at 95.376.

Likewise China's yuan fell to its lowest level against the dollar since October 2012 Monday after the People's Bank of China cut interest rates to shore up growth. The greenback bought 6.2850 yuan, during the day compared with 6.2650 Friday. But the Chinese currency, still subject to government intervention, edged back to 6.2726 in late trade.

On Saturday the PBoC said it would lower its one-year rate for deposits to 2.5% and its one-year lending rate to 5.35% -- both cuts by 25 basis points -- pointing to “historically low inflation”.

Merco Press |

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