Forex Today: Risk-on and dollar strength to start the week

What you need to know on Monday, March 8:

The American dollar extended its gains heading into the weekly close, following upbeat employment-related data and soaring government bond yields. The US created 379K new jobs in February, more than doubling the market’s expectations, while the unemployment rate shrank to 6.2%. Stocks rallied on the news, but also government bond yields. The yield on the benchmark 10-year Treasury note hit 1.626%, a fresh one-year high, finishing the week at 1.577%.

The EUR was among the worst performers, falling to 1.1892 against the greenback and settling nearby. GBP/USD and AUD/USD also fell, but closed the day off weekly lows, helped by oil and equities’ advances. The USD/CAD pair edged lower and closed the week in the red, amid higher oil prices, with WTI ending the week trading above $ 66.00 a barrel.

The USD/JPY pair soared to 108.64, a fresh 2021 high, retaining its weekly gains ahead of the close.

Gold managed to recover some ground, settling at $1,700 a troy ounce.

On Saturday, the US Senate passed the $1.9 trillion stimulus package, although some changes were introduced regarding the increase of the minimum wage to $15 per hour and the number of people who will qualify for a $1,400 stimulus payment. The final vote was 50-49, with all Democrats voting in favor of the bill and all Republicans voting against it. The bill, called American Rescue Plan Act, now moved back to the House, where it will be voted on Tuesday.

US Treasury Secretary Janet Yellen welcomed the news and tweeted: “With the economy down 9.5 million jobs since February 2020, it could be 2 years before the labor market simply reaches its pre-pandemic level. These high rates of job loss threaten the wellbeing of workers & their families.” She added that once it becomes law, she’s confident that “Americans will be met by a strong economy when we make it to the other side of the pandemic.”

 Chinese trade figures released over the weekend showed the Trade Balance surplus in dollar terms resulted in $103.25 billion, much better than anticipated. Exports rose 50.1% while imports were up by 14.5%. The news may support risk-on sentiment at the weekly opening.

The UK will start reopening this Monday, according to the plan outlined by Prime Minister Boris Johnson.

Risk-sentiment may remain on at the weekly opening.

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