(New throughout, updates prices, market activity and comments; new byline, changes dateline,
previous LONDON)
* Dollar hits two-month highs vs euro, yen
* Euro falls below $1.20
* Pound rebounds on relief over Bank of England comments
* Dollar goes to 105.46 yen
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
By David Henry
NEW YORK, Feb 4 (Reuters) - The dollar climbed toward a fifth straight daily gain on
Thursday on confidence in the U.S. economic outlook and the possibility that Friday's jobs
report might be stronger than expected.
The U.S. dollar index =USD rose 0.48% in New York morning trading to 91.507, its highest
level in two months and up 1.7% for the year.
The move came with a 0.54% decline in the euro, EUR=EBS which fell to $1.197, below what
had seemed a resistance level of $1.20 earlier this week. It was its first move below $1.20
since Dec. 1.
The dollar also gained 0.4% against the yen, JPY=D3 rising to 105.46, the highest level
since Nov. 11.
After the dollar index lost 7% last year, its gains since December have come on short
covering and a view that U.S. economy's recovery from the pandemic will be relatively stronger
than other countries.
"There's a fundamental shift here in the short term where we are seeing the U.S. economic
outlook really overpowering what we are seeing in the euro zone," said Ed Moya, senior market
analyst at OANDA.
That view was reinforced on Thursday when the U.S. government said the number of Americans
filing new applications for unemployment benefits decreased last week.
Initial claims for state unemployment benefits totaled a seasonally adjusted 779,000 last
week, better than economists had forecast and better than 812,000 in the prior week.
The dollar's move came as longer-term U.S. Treasury yields rose on Thursday as investors
positioned for a large pandemic relief package from Washington and a stabilizing U.S. labor
market.
The benchmark 10-year yield US10YT=RR was up 1.5 basis points in morning trading at
1.1461% and at one point reached 1.16%, its highest since Jan. 12. Democrats in the U.S. Senate were poised for a marathon "vote-a-rama" session aimed at
overriding Republican opposition to President Joe Biden's $1.9 trillion COVID-19 relief
proposal. At the same time, the British pound GBP=D3 dove as much as a half percent on the day ahead
of scheduled comments by the Bank of England about the possibility of negative interest rates
and then rebounded to trade up 0.12% after the central bank spoke. The bank said it would ask banks to get ready for the possibility of negative rates, but
that financial markets should not view sub-zero borrowing costs as a foregone conclusion.
It added that while it expects Britain's economy to probably shrink by 4% in the first three
months of 2021, it should recover rapidly towards pre-COVID levels over the year.
"The thing to monitor is how quickly Europe can get out the vaccine. If we see continued
slowness there, you will see the gap widen between euro and dollar," said Justin Onuekwusi,
portfolio manager at Legal & General.
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Currency bid prices at 10:48AM (1548 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Dollar index =USD 91.5070 91.0750 +0.48% 1.696% +91.5430 +91.0610
Euro/Dollar EUR=EBS $1.1970 $1.2035 -0.54% -2.03% +$1.2043 +$1.1967
Dollar/Yen JPY=D3 105.4600 105.0700 +0.40% +2.13% +105.4850 +105.0200
Euro/Yen EURJPY= 126.23 126.39 -0.13% -0.54% +126.4600 +126.1100
Dollar/Swiss CHF=EBS 0.9037 0.8990 +0.53% +2.15% +0.9040 +0.8987
Sterling/Dollar GBP=D3 $1.3658 $1.3642 +0.12% -0.03% +$1.3697 +$1.3566
Dollar/Canadian CAD=D3 1.2836 1.2785 +0.41% +0.81% +1.2842 +1.2778
Aussie/Dollar AUD=D3 $0.7592 $0.7618 -0.34% -1.31% +$0.7648 +$0.7589
Euro/Swiss EURCHF= 1.0815 1.0818 -0.03% +0.07% +1.0823 +1.0811
Euro/Sterling EURGBP= 0.8763 0.8820 -0.65% -1.95% +0.8839 +0.8752
NZ NZD=D3 $0.7156 $0.7213 -0.79% -0.35% +$0.7224 +$0.7155
Dollar/Dollar
Dollar/Norway NOK=D3 8.6475 8.5830 +0.72% +0.68% +8.6510 +8.5980
Euro/Norway EURNOK= 10.3545 10.3250 +0.29% -1.10% +10.3685 +10.3229
Dollar/Sweden SEK= 8.4623 8.3948 +0.24% +3.24% +8.4667 +8.3943
Euro/Sweden EURSEK= 10.1318 10.1072 +0.24% +0.55% +10.1468 +10.1075
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World FX rates https://tmsnrt.rs/2RBWI5E
USD https://tmsnrt.rs/3a0DdOD
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