©Reuters. FILE PHOTO: Euro, Hong Kong dollar, U.S. dollar, Japanese yen, pound and Chinese 100 yuan banknotes are seen in this illustration January 21, 2016. REUTERS/Jason Lee/File Photo
By Gertrude Chavez-Dreyfuss and Joice Alves
NEW YORK/LONDON (Reuters) – The dollar gained on Monday, rising for three consecutive sessions, as the killings of civilians in northern Ukraine and the prospect of increased sanctions pushed investors to seek safety in the dollar. .
The greenback also continued to benefit from a strong nonfarm payrolls report for March that supported expectations of a sharp half percentage point adjustment by the Federal Reserve at next month’s meeting.
“The dollar is bouncing higher as geopolitical developments have darkened the clouds over the global economy,” said Joe Manimbo, senior market analyst, in Western Union (NYSE:) Business Solutions in Washington.
“The dollar was already enjoying jobs-inspired gains after strong hiring and lower unemployment cemented expectations for large rate hikes in the US this year.”
French President Emmanuel Macron called for new sanctions, saying there were clear indications Russian forces had committed war crimes in the town of Bucha.
The Kremlin denied any accusation related to the killing of civilians in the town.
German Defense Minister Christine Lambrecht said the European Union should discuss ending Russian gas imports. Russia supplies about 40% of Europe’s gas needs.
In morning trading, the dollar, which measures the greenback against a basket of pairs, was up 0.3% at 98.89.
Data on Friday showed US unemployment hit a two-year low of 3.6% last month, prompting investors to assess whether the figures would strengthen the Fed’s resolve to tackle inflation by raising drastically rates.
The euro, which has come under pressure due to concerns about economic damage from the war in Ukraine, fell 0.6% to 0.4% against the dollar at $1.0988. Against the British pound, the euro fell to a six-day low and was down 0.6% at 83.73 pence.
“More sanctions, of course, also mean that the risk of energy disruptions in Europe increases, due to our own sanctions or because Russia could get completely serious about its counter-sanctions instead of just changing the mode of payment,” said Ulrich Leuchtmann, Commerzbank. (DE:) Head of FX.
“In my view, it increases the risk of significant euro weakness.”
Against the yen, the dollar was up 0.3% at 122.855 yen.
Kit Juckes, head of foreign exchange strategy at Societe Generale (OTC), said a 50bp rate hike had already been priced in.
“The CFTC data suggests the market has been rebuilding its long dollar position. That’s one of the reasons the dollar is making such an effort to continue higher right now,” he said.
Speculators’ net long bets on the dollar rose to an 11-week high in the latest week.
On Friday, fed funds futures traded an 80% chance of a 50 basis point rise next month, while two-year US yields hit 2.4950%, their highest level since March 2019.
Markets in mainland China were closed for a public holiday, but in foreign trade, the yuan remained under pressure on concerns about a prolonged lockdown in Shanghai, where authorities seek to test all 26 million residents for viruses.
Currency bid prices at 10:40 am (1440 GMT)
Description RIC Last US Closing Percent Change YTD Percent Offer High Offer Low
Dollar index 98.9310 98.6140 +0.34% 3.416% +98.9670 +98.5170
Euro/Dollar $1.0980 $1.1048 -0.59% -3.40% +$1.1054 +$1.0980
Dollar / Yen 122.8500 122.5450 + 0.24% + 6.71% +122.9450 +122.2800
Euro/Yen 134.89 135.32 -0.32% +3.51% +135.6800 +134.7700
Dollar/Switzerland 0.9263 0.9256 +0.08% +1.55% +0.9281 +0.9247
British Pound/Dollar $1.3119 $1.3115 +0.02% -3.00% +$1.3136 +$1.3094
Dollar/Canada 1.2486 1.2517 -0.24% -1.24% +1.2528 +1.2480
Aussie/Dollar $0.7522 $0.7498 +0.34% +3.49% +$0.7524 +$0.7483
Euro/Switzerland 1.0169 1.0222 -0.53% -1.93% +1.0240 +1.0160
Euro/Pound 0.8369 0.8422 -0.66% -0.37% +0.8430 +0.8370
NZ$0.6947 $0.6921 +0.39% +1.51% +$0.6954 +$0.6906
Dollar/Norway 8.6770 8.7425 -0.71% -1.47% +8.7615 +8.6515
Euro/Norway 9.5270 9.6572 -1.35% -4.85% +9.6744 +9.5052
Dollar/Sweden 9.4108 9.3683 -0.04% +4.36% +9.4490 +9.3556
Euro/Sweden 10.3341 10.3379 -0.04% +0.98% +10.3967 +10.3310