Greenback pushes towards 3-month highs again

London

THE US dollar rose on Monday and held just below its strongest level since mid-January, with weaker-than-expected German retail sales knocking eurozone sentiment as investor appetite for the greenback improves.

After weakening at the start of 2018, a rise in US Treasury yields have helped the US dollar stage a recovery in the past fortnight at the same time as doubts grow about when the European Central Bank will tighten monetary policy.

US consumer spending numbers, due out later on Monday along with the Federal Reserve's monetary policy meeting and a crucial jobs report scheduled for later in the week, could help the US dollar rally further, analysts said. "With US yields meandering around the 3 per cent mark, in the near term the dollar can definitely rise further," Societe Generale FX strategist Alvin Tan said. "That said, we think longer term the euro can move higher."

The 10-year US Treasury yield hurdled 3 per cent last week and remains close to that level, encouraging investors to buy the US dollar. The US dollar's index rose 0.3 per cent to 91.780, down from Friday's high of 91.986, its strongest level since Jan 11. The greenback last week enjoyed its biggest weekly gain in more than two months, and the US currency began this week on a strong footing.

German monthly retail sales unexpectedly dropped in March, dampening cheer around a consumer-led upswing in Europe's biggest economy. Regional data showed annual inflation in four German states steady in April, suggesting price pressures in Europe's largest economy are stable. The euro dropped 0.4 per cent to US$1.2088, not far from its three-month lows last week of US$1.2110.

Elsewhere, the US dollar rose versus the Japanese currency, up 0.2 per cent to 109.25 yen, having set a 2-1/2 month high of 109.54 yen on Friday. Trading was thin with Japanese markets closed for a holiday.

Sterling tumbled further, hitting a low of US$1.3715, as the US dollar gained and investors further trimmed expectations that the Bank of England would raise rates next month following weak first-quarter GDP data published last week.

The US currency also gained versus the Canadian and Australian dollars, the latter down half a per cent and close to its 4-1/2 month low reached last week. REUTERS