Investing.com – The dollar edged higher in early European trading Monday, rebounding to a degree after earlier falling to multi-year lows against a number of currencies as vaccine progress prompted optimism on a prompt global economic recovery.
At 3:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was up 0.1% at 90.442.
GBP/USD was down 0.2% at 1.3986, after earlier Monday climbing to 1.4052, its highest since April 2018, with Prime Minister Boris Johnson set to detail his country’s path out of lockdowns on the back of rapid vaccinations.
The risk-sensitive AUD/USD fell 0.1% to 0.7862, after earlier climbing to an almost three-year high of 0.7908, while NZD/USD fell 0.2% to 0.7290, easing back from 0.7338, its best since early 2018, helped by S&P’s upgrade of New Zealand’s sovereign credit ratings by a notch.
Although the greenback has edged higher Monday morning, the overall tone for the safe-haven dollar remains negative as the focus remains on the global economic recovery from Covid-19 pandemic.
Federal Reserve Chairman Jerome Powell testifies before Congress this week, starting on Tuesday, and investors will study his words carefully for any clues as to when the central bank’s easy monetary policy stance will start to change.
“Fed Chair Powell will have the difficult task to express confidence on the recovery while keeping tapering speculations muted at his semi-annual testimony,” said analysts at ING, in a research note.
“Bonds may stay fragile, but the dollar has struggled to rally on the recent spike in yields and the recovery story may keep supporting pro-cyclical currencies.”
The coming week should also see some progress on the US$1.9 trillion fiscal stimulus bill, where a vote could go to the House floor on Friday. This means the Senate should see the bill the following week.
“The Senate is on track to send a robust $1.9 trillion package to the president’s desk before the March 14 expiration of unemployment insurance benefits” from the last round of stimulus, Senate Majority Leader Chuck Schumer said in a Friday letter to colleagues. “We will meet this deadline.”
Additionally, USD/CNY rose 0.2% to 6.4688 after the People’s Bank of China kept its loan prime rates steady for a 10th month in February. The five-year loan prime rate was set at 4.65%, while the one-year loan prime rate was set at 3.85%