The dollar index was little changed on the day at 90.959
The dollar was flat to slightly lower on Monday in choppy trading, after falling sharply on disappointing U.S. jobs data last week, even as investors also focused on rallying cryptocurrencies led by bitcoin after Tesla announced a $1.5 billion investment in the digital asset.
The dollar index was last at 90.959, little changed on the day. On Friday, it fell after data showed the U.S. economy created fewer jobs than expected in January and job losses in December were greater than initially reported.
Investors, however, continued to see a faster U.S. recovery than in most countries. Many analysts now believe the dollar will remain well-bid in the near to medium term, after a nearly 7% drop in 2020. So far this year, the dollar has gained 1.1%.
Jonas Goltermann, senior markets economist, at Capital Economics attributed the dollar’s rebound from lows late last year to the U.S. government’s relative success in rolling out the COVID-19 vaccines.
According to Capital Economics analysis, more than 10% of Americans have now received a first vaccine dose, a much faster pace of vaccine rollout than any other major economy aside from the UK.
To the extent that this divergence continues, it could help the dollar rally further, Goltermann said. After all, if the U.S. economy fared better than its peers, investors would probably favour U.S. assets over those elsewhere.
Speculators have also been reducing short positions – bets the dollar will weaken – on the currency. Net bearish bets on the dollar by speculators fell to $29.95 billion for the week ended Feb. 2, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data.
In afternoon trading, the euro was flat against the dollar at $1.2050.
In a note to clients, J.P. Morgan strategists said they “have growing confidence of underperformance of EUR vs. USD.”
Investor morale in the euro zone unexpectedly fell in February as lockdowns to suppress the COVID-19 caseload left their mark on the economy, which lost touch with other regions in the world as they recovered further, a survey by Sentix showed.
Sentix’s investor sentiment index for the euro zone fell into negative territory, dropping to -0.2 from 1.3 in January.
The dollar slipped 0.1% against the yen to 105.215, having pulled back from a three-month high reached on Friday.