Dollar Benefited From an Upbeat Market Mood

On Monday,  the U.S. dollar rose against its major rivals as an upbeat market helped to boost European equities as well as government bond yields for the first day of trading of 2022.

However, Europe’s main FX trading center was closed on Monday. So, volume was expected to remain limited.

The omicron variant continued to affect global travel and public services. But Covid’s new variant is not as dangerous as the previous variants according to several studies.

The dollar index, which measures the U.S. currency against major peers, gained 0.12% to 95.79. The pan-European STOXX 600 reached a new record high and U.S. futures pointed to a positive session on the other side of the Atlantic ocean. 

On Monday, the Japanese yen retreated briefly to 115.36 per dollar, its lowest since the end of November. Still, the yen gradually climbed to 115.15.

Dollar, euro, lira, and pound

The euro fell against the U.S. dollar. The single currency dropped 0.21% to $1.1345, while Germany’s 10-year benchmark yield briefly jumped about four basis points to -0.138%, its highest level since November.

Supply bottlenecks had a negative impact on manufacturing activity in December. However, German manufacturers with full order books expressed confidence that these will ease in 2022.

In the broader euro zone, manufacturing activity remained strong as factories took advantage of an easing in supply chain constraints. They stocked up on raw materials at a record pace. 

The British pound fell 0.5% to $1.3517.

Turkey’s annual inflation surpassed expectations. It rose far more than expected to 36.08% year-on-year in December, the highest since September 2002. 

The Turkish lira was trading at 13.4 against the U.S. dollar after the data 1.7% weaker on the day. The lira dropped 44% of its value in 2021 after a volatile November and December.