Dollar Firm, Stock Rally Pauses After U.S. Data

The dollar edged up against the yen on Monday and European stocks clung near last week’s multi-year highs after a strong U.S. jobs report eased concerns about the global economic growth outlook.

German government bonds, gold and oil were all little changed to slightly firmer in thinly traded markets due to a holiday in the UK.

With Japan also out on Monday, the dollar’s potential to tackle the 100 yen level was seen as limited but traders said Friday’s payrolls report and the subsequent rise in U.S. Treasury yields had set the stage for a test.

“The U.S. does seem to be in a cyclical recovery. It is outperforming all the rest of the major (developed) economies globally, and that can’t be ignored,” said Greg Matwejev, director of FX, Hedge Fund Sales and Trading for Newedge. “We’ve probably got a better chance at making a crack at 100 now and I wouldn’t be surprised in the coming sessions that we do see that happen.”

U.S. employment rose more than expected in April at 165,000, and hiring was much stronger than previously thought in the previous two months, easing concerns raised in other data which had pointed to the economy losing steam.

The dollar rose 0.3 percent to 99.35 yen on Monday, after climbing 1 percent at the end of last week. It was mostly steady against the euro at $1.3110.

Ten-year U.S. Treasury yields were steady at 1.74 percent after recording the biggest single-day jump since September 14 on Friday.

The FTSE Eurofirst 300 index of top European shares edged down around 0.15 percent in early trade, having reached its highest close since June 2008 at the end of last week when the European Central Bank cut interest rates in a fresh attempt to stimulate the economy.

MSCI’s broadest index of Asia-Pacific shares outside Japan climbed nearly one percent with Australia’s main share index also about 1 percent higher. Malaysian shares were the biggest gainers, rising 3 percent after the ruling coalition government won a tight election.

Commodities were adding to their recent gains, having powered higher on Friday after the U.S. jobs report.

Brent crude was up 11 cents at $104.24 a barrel while Shanghai copper futures jumped by their 5 percent daily limit on Monday. Gold was trading near its highest level in more than two weeks, up $7.05 an ounce to $1,477.25.

Reuters