By Stanley White
TOKYO (Reuters) – The dollar was largely steady on Monday as investors soaked up last week’s strong U.S. employment report and looked ahead to data on the U.S. services sector for affirmation of a solid economic rebound from the coronavirus shock.
The greenback posted its best quarter against major currencies in almost three years in January-March thanks to an improving U.S. economy and rising Treasury yields.
The U.S. currency is likely to build on those gains as investors look for ways to bet on a global economic recovery from the worst of the coronavirus pandemic, analysts said.
“I thought there would be a correction lower in the dollar, but that didn’t happen,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.
“The dollar’s upward trend is very strong. In the new quarter perhaps the best thing for investors to do is to just follow this trend.”
The dollar was last quoted at 110.62 yen, not far from its strongest level in a year.
Against the euro, the dollar traded at $1.1760, which is close to a five-month high.
The British pound held steady at $1.3826.
The dollar rose to 0.9430 Swiss franc.
The U.S. economy created more jobs than expected in March, data showed on Friday. However, there was scant reaction in currencies as most major stock and bond markets were closed for Easter holidays.
Overall, the outlook for the dollar remains solid as the underlying economic pulse pointed to a strengthening recovery. A survey from the Institute for Supply Management due later on Monday is expected to show U.S. non-manufacturing activity expanded at a faster rate in March.
Trading was subdued on Monday in Asia as financial markets in Australia, New Zealand, China, and Hong Kong are also closed, although the bias is for the dollar to strengthen further, analysts said.
The against a basket of six major currencies was little changed at 93.015,
Dollar short positions in the currency market fell last week to the lowest since June last year, U.S. Commodity Futures Trading Commision data showed – another positive sign for the greenback.
Elsewhere, the Australian dollar edged up to $0.7613, while the New Zealand dollar bought $0.7027.
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