The dollar stood tall on Wednesday after rallying overnight on bargain-hunting by currency bulls who scooped up the greenback following the tumble induced by weak U.S. non-farm payrolls late last week. The dollar was steady at 120.325 yen after jumping 0.6 percent the previous day, when currency markets returned to full strength following the Easter holidays.
The greenback was back at a level prior to Friday’s much weaker-than-expected U.S. jobs data release, which took it down to as low as 118.71 yen by cooling prospects of an earlier interest rate hike by the Federal Reserve. The euro stood little changed at $1.0820 after falling 1 percent overnight. The common currency had climbed as far as $1.1036 earlier in the week, albeit in thin trading as many key markets were still shut for the Easter holidays.
The dollar’s sharp rebound was testimony to its underlying strength as it occurred in the absence of supportive U.S. data and debt yields, which actually dipped on Tuesday. Moreover, the bounce helped reinforce the notion that the diverging monetary policy theme remained a key underlying factor. The Fed is poised to hike rates sooner or later but its euro zone and Japanese counterparts remain committed to quantitative easing.