© Reuters. Illustration photo of a U.S. Dollar note
By Daniel Leussink
TOKYO (Reuters) – The dollar drifted higher against the euro and British pound on Monday, supported by the relative strength of the U.S. economy, though moves remained small as many investors were still away for the long Easter weekend.
Financial markets in Australia, Hong Kong and many major countries in Europe are closed on Monday for the Easter holiday. Currency trading continues globally but volume is expected to be light.
The dollar has found support in recent weeks on the back of a gradual rise in and signs of strength in the world’s top economy, including better-than-expected retail sales in March, following a weak start to the year.
“It’s better to say that the euro has been weak rather than that the dollar is strong,” said Yukio Ishizuki, senior currency strategist at Daiwa Securities.
“Traders have mostly priced in the weakness of the euro zone economy by now,” Ishizuki said. “It’s a little bit difficult to see the euro weakening further from here, so I think it will be hard for the dollar to strengthen.”
The was last down a tenth of a percent at 97.369, drifting slightly lower after booking a 0.4-percent gain last week.
The index remained within striking distance of its 2019 high of 97.71 brushed in early March.
Investors’ immediate focus will be on U.S. existing home sales for March, due at 1400 GMT, for further cues on the health of the U.S. economy.
In February, U.S. home sales surged to their highest in 11 months, as the country’s housing market showed renewed momentum following a pause in interest rate hikes by the Federal Reserve.
The euro was a tad lower at $1.1244, adding to last week’s losses of nearly half a percent after data on Thursday showed that activity in Germany’s manufacturing sector shrank for a fourth straight month in April.
The pound was last down 0.05 percent at $1.2994, dipping below the $1.30 handle and nearly 0.4 percent off a two-month low of $1.2945 hit last month.
Against the Japanese yen, the dollar was 0.1 percent higher at 111.98 yen, within reach of this year’s peak of 112.17 hit on Wednesday last week.
Starting Saturday, Japan will have an unprecedented 10-day holiday from late April to early May to mark the ascension of the new emperor, Crown Prince Naruhito.
Daiwa’s Ishizuki said he expected currency trading by Japanese investors to remain relatively light as traders and companies are shifting into holiday mode.
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