The U.S. dollar index fell 0.31% to 92.89 on Thursday (April 1), the lowest since Monday, as optimism about U.S. infrastructure plans pushed up the stock market; the U.S. dollar fell slightly after the release of initial jobless claims data, as of March 27 In the week of that day, the number of initial claims for unemployment benefits was 719,000.
In the first three months of this year, the U.S. dollar index rose 3.6%, its best quarterly performance since June 2018. Investors bet that the US economy will recover quickly and strongly. Edward Moya, a senior market analyst at the online foreign exchange trading platform OANDA, said that we see the growth prospects of the United States crushing Europe. Less than three months after the Biden administration took office, it will launch a second trillion-dollar economic stimulus package. We are likely to see the U.S. economy booming, which may push the dollar and U.S. bond yields to rise.
U.S. President Biden announced on Wednesday the long-awaited employment plan of more than $2 trillion, including an investment of $621 billion to rebuild infrastructure.
At the same time, US data shows strong growth prospects. The US manufacturing index in March was 64.7, higher than expected and the highest in more than 37 years. However, this was offset by the slowdown in construction spending and the unexpected increase in the number of initial jobless claims in the United States in the past week.
As the dollar index rose in the first quarter, the largest component currency in the index, the euro, was struggling because of concerns that the euro zone’s economic recovery was being hindered by the third wave of new crown virus infections. French President Macron ordered the country to enter the third round of nationwide lockdown and said that schools will be closed for three weeks. In terms of vaccination, the Eurozone also lags behind the United States. However, data shows that the monthly growth rate of manufacturing activity in the Eurozone is the fastest in nearly 24 years, boosting confidence in Europe. The euro against the dollar rose 0.40% to 1.1777 after digesting the selling near 1.1760; option interest points to the rise, with 210 million euros and 1.1800 one-week call options trading.
The main data to be released this week in the United States is the non-agricultural employment report. Economists expect that the number of jobs will increase by about 650,000 in March. Matt Weller, head of global market research for FOREX.com and City Index, said that given recent price trends if the employment report fails to meet expectations, the risk of the dollar being sold is high. Under this circumstance, the severe setback EURUSD has room to rebound to the 200-day moving average and the previous support near the $1.1830 level at the beginning of next week.
The dollar fell 0.09% to 110.62 against the yen, the first decline since March 23; it was supported by the rise in the cross exchange rate. USD/JPY posted its biggest monthly gain since November 2016 in March. Stephen Gallo and Greg Anderson of theof wrote in a research report on Friday that if the Japanese economy picks up (partly due to the weak yen), then Japanese investors may continue to reduce their holdings of foreign stocks and participate in the rise of domestic stocks; if this Eventually becoming the mainstream of securities flows in April, then the yen is likely to rebound sharply, basically reversing the decline in the first quarter Spark Global Limited.
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