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FOREX: The dollar consolidates the earnings of the first quarter with the spending plan in the US

Por Julien Ponthus

LONDON, Apr 1 (Reuters) – The dollar consolidated its first-quarter gains on Thursday on the back of a US government spending plan of $ 2 trillion, hovering near multi-month highs as a new lockdown in France weighed on the euro.

In early trading in Europe, the dollar index stood at 93,286, close to the five-month high of 93,439 reached on Wednesday.

The US currency appreciated 3.57% against the basket of the six major currencies during the first quarter of 2021, its best quarterly performance since 2018, as investors are betting on a fast and solid economic recovery.

As the dollar rose, the euro – the largest component of the index – suffered from concerns that the euro zone’s economic recovery will be hampered by a third wave of COVID-19 infections.

President Emmanuel Macron ordered France’s third national lockdown and said schools would close for three weeks as the currency bloc trailed the United States in vaccination programs.

“As long as the news flow on either side of the Atlantic is more or less diametrically opposite, there is not much to say in favor of the euro,” Commerzbank analyst Antje Praefcke wrote to her clients.

US President Joe Biden announced his expected employment plan of more than $ 2 trillion, including $ 621 billion to rebuild infrastructure.

The euro was trading at $ 1.1720, after hitting a nearly five-month low of $ 1.1704. Against the British pound, the common European currency was up 0.08%, after hitting a 13-month low of 0.85025 pounds.

The greenback was firm against the yen after ending March with its biggest monthly gains since November 2016.

The dollar was trading at 110.77 yen, after having risen to 110.97, its highest in a year.

While the US dollar remained strong, the Australian dollar fell 0.67% to $ 0.7542, a low last seen in late December.

The Chinese yuan was down 0.3% to 6.582 against the dollar after data showed Chinese factory activity in March expanded at the slowest pace in nearly a year.

Although currency trading is expected to slow towards the Easter holidays in many parts of the world, the dollar could gain if major US economic indicators surprise with improvement.

Thursday’s Institute for Supply Management (ISM) survey is expected to show further improvement in manufacturing activity.

Economists expect US employment data to be released on Friday to show an increase of some 650,000 payrolls in March, while the latest rumors in the market suggest that it could rise and even exceed one million.

ADP’s national employment report showed on Wednesday that US private payrolls increased by 517,000 jobs last month, slightly below market forecasts.

In the crypto-asset market, bitcoin remained firm in recent days to trade at $ 58,721.

(Information from Julien Ponthus and Hideyuki Sano; edited by Himani Sarkar and Christopher Cushing; translated by Darío Fernández at the Gdansk newsroom)

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