Dollar Up Despite Strong Chinese Data; Euro Struggles

The U.S. dollar held firm at a four-week high against its rivals on Monday as an undercurrent of risk aversion swept through currency markets in the backdrop of weak U.S. economic data, knocking the Australian dollar and the euro lower.

With U.S. markets shut for a holiday on Monday and Joe Biden set to be inaugurated as the next U.S. President on Wednesday, major currencies remained within well-worn ranges expecting some volatility later in the week.

After a dollar selloff last year, the opening weeks of 2021 has seen a reversal of fortunes with a broad dollar basket rising nearly 2% so far this year thanks to a broad-based rise in U.S. Treasury yields, though analysts remain wary about the short-term outlook.

“History suggests a strong seasonal pattern that points to the potential for further near-term strength but this seasonal bias might prove less forceful this year given the broad macro backdrop remains consistent with continued optimism and support for risky assets,” MUFG strategists said.

The euro dipped to a six-week low of $1.2066. The Antipodeans were soft against the greenback with the Aussie hitting a one-week trough of $0.7679, while the kiwi at a three-week low of $0.7117. AUD.