The US dollar dropped further on Monday as it continues to face the carry-over effects of a depressing jobs report from Friday, questioning the timing for the potential interest rate hike.
The rising expectations over the interest rate increase by the US Federal Reserve sometime later this year have fueled the greenback’s rally since middle of 2014. Higher rate of interest will keep dollar-denominated assets at a yield advantage against the basket of currencies, including yen and euro, where rate of interest are being kept low.
The markets in Europe remained closed on Monday on the occasion of Easter, limiting trading volumes as well as leading to the narrow ranges.
The euro held above the USD 1.10 mark. One foreign exchange strategist has expressed hope in the strong returning of the greenback.
Greg Anderson, foreign exchange strategy’s global head at New York-based BMO Capital Markets, said, “Chalk up the euro’s strength to low volumes. It has had stiff resistance at the USD 1.1050 level, which goes back to the beginning of March. You might have a few people positioning for that move higher in euro but nobody is pounding the table on that and I think it is a sell above USD 1.10.”
The US dollar traded in a modest fashion higher against the yen at 119.08 yen, an increase of 0.11 percent.
The jobs data, released on Friday by the labor department, showed US non-farm payrolls increased by 126,000 in March, which is the smallest gain since December 2013.
The US dollar dropped 0.20 percent against the Canadian counterpart at C$1.2456, CAD=, near the bottom of its C$1.24 to C$1.28 range that has remained in place since the January-end. The halt in the buying of the greenback against the Canadian currency has provided a good opportunity, said BMO’s Anderson to pick up the US dollar once again.