SYDNEY () – Asian stocks rose on Monday as the dollar held close to three-month highs after the U.S. Senate adopted a $ 1.9 trillion stimulus bill and a surprisingly strong payroll report, which is good for the global economic recovery.
There was also optimistic news in Asia, as Chinese exports rose 155% in February compared to a year earlier when much of the economy shut down in the fight against coronavirus.
BofA analyst Athanasios Vamvakidis argued that the strong combination of U.S. incentives, faster opening, and greater consumer firepower is an obvious positive value for the dollar and bond withdrawals.
“Including the current proposed stimulus package further from infrastructure law in the second half, total U.S. fiscal support is six times higher than the EU Recovery Fund,” he said. “The Fed also supports the American money supply, which is growing twice as fast as the eurozone.”
The outlook for even faster growth helped MSCI’s broadest Asia-Pacific stock index outside of Jan by 0.4%. Janov Nikkei earned 1.2%, while the futures of the S&P 500 rose 0.3%, after a sharp turnaround on Friday.
Equity investors were swayed by U.S. data showing that non-farm wages rose 379,000 jobs last month, while the unemployment rate fell to 6.2% in a positive sign for the company’s income, consumption and earnings.
U.S. Treasury Secretary Janet Yellen tried to counter inflation concerns by noting that the real unemployment rate is closer to 10%, and there is still a backlog in the labor market.
Still, yields on U.S. 10-year treasuries continued to reach a one-year high of 1.625% after the data, and stood at 1.60% on Monday. Yields rose by a whopping 16 basis points in a week, while German yields actually reduced 4 basis points.
The European Central Bank will meet on Thursday amid talks to protest the recent rise in eurozone yields and in a number of ways to curb further increases.
The different yield trajectory boosted the dollar to the euro, which fell to a three-month low of $ 1.1892 and was last nailed to $ 1.1920.
Ned Rumpeltin, European head of foreign exchange strategy at TD Securities, said the end of support on the $ 1.1950 chart is a bearish development targeting $ 1.1800.
“A solid U.S. employment report could be the last missing part of a stronger narrative in the USD,” he added. “That should put the dollar in a much stronger position against other major currencies.”
The dollar index has properly climbed levels not seen since late November, last standing at 91,897, well above the recent low of 89,677.
It also rose to a low-yield yen, reaching a nine-month high of 108.63, and last changed hands to 108.37.
The yield jump weighed on gold that did not offer a fixed return and left it at $ 1,706 an ounce and just above the nine-month low.
Oil prices rose to their highest level in more than a year after Yemeni Houthi forces dropped drones and rockets into the heart of Saudi Arabia’s oil industry on Sunday, raising production concerns.
Prices have already been supported by the decision of OPEC and its allies not to increase supplies in Rila. [O/R]
Brent rose $ 1.09 a barrel to $ 70.45, while U.S. oil rose $ 1.08 to $ 67.17 a barrel.