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Dollar gains against major currencies on risk appetite

The U.S. dollar and Euro currencies
Dado Ruvic | Reuters

The U.S. dollar rose against a basket of major currencies on Monday on renewed risk appetite in the wake of a disappointing U.S. jobs report that suggested the Federal Reserve would hold off on raising interest rates for longer.

Data on Friday showing a stumble in U.S. jobs growth has led traders to expect that the Fed will delay its first rate hike since 2006 to early next year. That view boosted risk appetite and put selling pressure on the euro, yen, and Swiss franc, which traders view as safer funding currencies given their low yields.

A U.S. rate hike is expected to boost the dollar by driving investment flows into the United States. While the dollar has previously weakened on expectations for later Fed rate hikes, the greater risk appetite took precedence on Monday.

"The risk appetite flows are trumping any disappointment on the interest rate front," said Boris Schlossberg, managing director at BK Asset Management in New York.

The U.S. dollar index, which measures the greenback against a basket of six major currencies, was last up 0.26 percent at 96.081, marking a recovery from a nearly two-week low of 95.218 hit Friday. The dollar also hit a one-week high against the yen of 120.550 yen.


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The view that the European Central Bank and Bank of Japan could increase their monetary stimulus programs also helped the dollar gain against the euro and yen, analysts said. The dollar weakened against some riskier emerging market currencies, however, on the greater risk appetite.

Against the Brazilian real, the dollar was last down 0.67 percent at 3.9 reais.

"If the Fed is seen as having an accommodative stance for longer, whereas you have active easing from the ECB and the BOJ and the potential that they could do more, that is supportive of the overall risk environment," said Eric Viloria, currency strategist at Wells Fargo Securities in New York.

The dollar was last up 0.46 percent against the yen at 120.450 yen, and was up 0.41 percent against the Swiss franc at 0.97570 franc.

On Wall Street, the benchmark S&P 500 stock index was last up 1.89 percent.