* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
By Hideyuki Sano
TOKYO, April 1 (Reuters) - The dollar held near a
multi-month high against other major currencies on Thursday as
investors bet fiscal stimulus and aggressive vaccinations will
help the United States grow faster than other economies.
The dollar's index against a basket of six major currencies
=USD hit a five-month high of 93.439 on Wednesday and last
stood at 93.209 =USD .
The gains came as the euro, by far the biggest component in
the index, suffers from concerns the euro zone's economic
recovery is being hampered by a third wave of COVID-19
infections.
President Emmanuel Macron ordered France into its third
national lockdown and said schools would close for three weeks
while the currency bloc also lagged the United States in
vaccination programmes. The euro changed hands at $1.1726 EUR= , after hitting a
near five-month low of $1.1704.
Against the British pound, the common currency hit a
13-month low of 0.8503 pound and last stood at 0.8509
EURGBP=D4 .
The U.S. currency held firm against the yen after ending
March with its biggest monthly gains since November 2016.
The dollar traded at 110.74 yen JPY= , having risen to as
high as 110.97, its highest level in a year.
"Rises in U.S. bond yields on hope of vaccine rollouts and
fiscal stimulus are boosting the dollar, as the dollar/yen is
known to be particularly sensitive to interest rates
differentials," said Yujiro Goto, chief FX strategist at Nomura
Securities.
"Yen-selling due to Japanese companies' foreign direct
investment is coming back after a slowdown due to the pandemic
last year," he added.
Japanese conglomerate Hitachi 6501.T on Wednesday
announced $9.6 billion acquisition of U.S. software company
GlobalLogic Inc. Some traders speculated flows related to the deal could be
behind some of the dollar's recent rises.
U.S. President Joe Biden announced his long awaited $2
trillion-plus job plan, including $621 billion to rebuild
infrastructure. Coupled with his recently enacted $1.9 trillion coronavirus
relief package, Biden's infrastructure initiative would give the
federal government a bigger role in the U.S. economy than it has
had in generations, accounting for 20% or more of annual output.
But the effort sets the stage for the next partisan clash in
the Congress where members are divided on the total size and
inclusion of programs traditionally seen as social services.
That leaves big uncertainties on how the plan will end up,
helping to keep immediate market reactions to minimum.
"On the detail to hand, this new package would certainly be
a big positive for the U.S. economy if passed by Congress," said
Elliot Clarke, senior economist at Westpac in Sydney.
"However, the $2 trillion of the proposed infrastructure and
investment initiatives would be spread across eight years.
Further, this is not $2 trillion in net stimulus. Rather it is
to be offset over 15 years by an increase in the corporate tax
rate from 21% to 28% as well as the rate multi-national
companies pay on overseas profits," he added.
While currency trading is expected to slow towards the
Easter holidays in many parts of the world, the dollar could
gain further if upcoming key U.S. economic indicators surprise
on the upside.
A survey by the Institute for Supply Management (ISM) on
Thursday is expected to show a further improvement in the
manufacturing activity.
Economists expect Friday's job data to show an increase of
about 650,000 payrolls in March while the latest chatter in the
market is it could swing higher, and even top one million.
The ADP National Employment Report showed on Wednesday U.S.
private payrolls increased by 517,000 jobs last month, slightly
lower than market forecasts. In the crypto asset market, bitcoin maintained its firmness
over the past several days to trade at $58,766 BTC=BTSP .
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