The dollar headed for its best weekly gain in three months on Friday, lifted by growing confidence that the U.S. economic recovery will outpace its global peers.
The dollar index touched a twomonth high in Asian trade amid signs of resilience in the labour market, with closely watched U.S. nonfarm payroll figures due later. It retreated in early London deals.
The dollar greenback also renewed highs versus the euro and yen during Asian trade, although both currencies recouped their losses in European trade.
The U.S. economy is exceptionally strong relative to other countries, causing dollar shortcovering, said Tohru Sasaki, J.P. Morgans head of Japan market research in Tokyo, pointing to employment and manufacturing indicators as well as the pace of vaccinations.
The current bout of dollar strength could continue for several weeks, he said, but the picture is murkier thereafter as Europe and Asia catch up with immunisations and the Federal Reserves continued ultraeasy monetary policy caps a rise in longterm U.S. yields.
The dollar index touched 91.60 for the first time since Dec. 1, before drifting back lower to 91.375 by 0853 GMT.
The gauge has risen every day this week and is on track for a 1.1 weekly advance, the most since Nov. 1 and building on a 0.3 rise the previous week.
The dollar has been supported by a rise in longerterm U.S. Treasury yields, which came as traders positioned for massive fiscal spending.
Democrats in the U.S. Senate were poised for a…