Dollar gains on economy recovery optimism and upbeat US data

The greenback ended higher against its G4 peers on Monday on optimism that the U.S. economy will rebound at a faster pace as new stimulus package and Covid-19 vaccinations rollout together with upbeat ISM manufacturing PMI data.  
  
Reuters reported U.S. manufacturing activity increased to a three-year high in February amid an acceleration in new orders, but factories continued to face higher costs for raw materials and other inputs as the pandemic drags on.     The Institute for Supply Management (ISM) said on Monday its index of national factory activity rebounded to a reading of 60.8 last month from 58.7 in January. That was the highest level since February 2018.   
  
Versus the Japanese yen, although dollar briefly dipped to 106.37, price rose to 106.69 in Asian morning and then ratcheted higher to a 6-month high of 106.88 at New York open due to usd's strength before retreating to 106.71 on profit-taking.  
  
Although the single currency recovered to 1.2101 at Asian open, price met renewed selling and intra-day fall accelerated at European open and then dropped to 1.2029 before rebounding to 1.2069 in New York morning. However, the pair then weakened to an 11-day low of 1.2028 on ECB policymaker Francois Villeroy de Galhau's negative comments.  
  
Reuters reported some of the recent rise in bond yields is unwarranted and the European Central Bank needs to push back using the flexibility embedded in its bond purchase programme, ECB policymaker Francois Villeroy de Galhau said on Monday.     Villeroy said that the ECB stood ready to adjust all of the instruments at its disposal, including lowering its deposit facility rate if necessary.      He added that while inflation is indeed rising, this increase is in part temporary, so its significance should not be overstated.  
  
The British pound went through a volatile session as despite rising from 1.3920 in New Zealand to session highs of 1.3999 in Asian morning, cable erased intra-day gains and fell from 1.3998 at European open to 1.3905 at New York open on renewed usd's strength before rebounding to 1.3962 on short-covering and then swung broadly sideways.  
  
Data to be released on Tuesday :  
  
New Zealand terms of trade, import prices, export prices, GDT price index, Japan unemployment rate, business capex, Australia building permits, current account, net exports contribution, RBA interest rate decision, Germany retail sales, unemployment change, unemployment rate, UK nationwide house price index, EU HICP, core HICP, Canada GDP, and U.S. redbook, ISM New York index.