Dollar Gauge Rises for Seventh Day on Outlook for Higher Rates

A gauge of the dollar rose for a seventh day, the longest winning streak since January, before U.S. economic data this week that may add to speculation the economy is strong enough to handle higher interest rates.

The greenback strengthened against all except two of its 16 major counterparts after some Federal Reserve officials said last week they would consider raising rates at the next meeting in April. The yen weakened as gains in U.S. stock futures and shares in Japan and China reduced demand for safer assets.

“Expectations for solid U.S. economic data this week are lifting the dollar,” said Koji Fukaya, chief executive officer at FPG Securities Co. in Tokyo. “It’s hard to find a reason to sell dollars. Concerns over the U.S. economy, China, oil, which had fueled risk aversion, are subsiding to underpin the dollar and weigh on the yen.”

The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, rose 0.1 percent as of 11:35 a.m. in Tokyo in Monday after advancing 1.3 percent last week. The dollar appreciated 0.5 percent to 113.64 yen and climbed 0.1 percent to $1.1156 per euro. The yen dropped 0.4 percent to 126.80 per euro.

Easter Holiday

Financial markets including those of the U.K, Germany, Australia, and New Zealand are shut Monday for the Easter holiday. Trading will take place as normal in the U.S.

U.S. employers added 208,000 workers in March, after hiring 242,000 the previous month, according to a Bloomberg survey before the Labor Department releases the figure on April 1. Data to be released Monday include personal income and spending and the Fed’s favored inflation gauge.

“The dollar will be highly sensitive to U.S. data this weak ahead of payrolls,” Takeru Kurokawa, an analyst in Tokyo at Ueda Harlow Ltd., which provides margin-trading services, wrote in a note to clients. “The dollar is prone to react more to positive U.S. economic news.”

U.S. policy makers should consider raising interest rates at their next meeting in April, Fed Bank of St. Louis President James Bullard said March 23. Fed Bank of Philadelphia President Patrick Harker said last week the U.S. economy is resilient, and he’d support a quarter-point increase if that continues.

Speculators and hedge funds trimmed bets for a third week that the U.S. currency will strengthen against eight of its major peers, according to data from the Commodity Futures Trading Commission.

To contact the reporter on this story: Chikako Mogi in Tokyo at cmogi@bloomberg.net. To contact the editors responsible for this story: Nicholas Reynolds at nreynolds2@bloomberg.net, Amit Prakash

By: Chikako Mogi

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