Dollar gains versus euro

The dollar edged higher against the euro on Monday, aided by a jump in global stock markets and rising Treasury yields. Thin trading due to holidays in Tokyo and London added to volatility in the euro, but the dollar was expected to outperform the single currency as concerns about some eurozone nations' ability to sell debt top investor worries.
"There are plenty of factors that should weigh on the euro over the near-term while the dollar should continue to benefit from strong economic data," said Mark McCormick, currency strategist at Brown Brothers Harriman in New York. Wall Street stocks surged more than 1 percent as the new trading year kicked off and the rally of late 2010 resumed on encouraging signs about the economic outlook and a seasonal effect.
US Treasury yields, which move inversely to price, rose, though investors may wait until after Friday's US jobs data to bet on yields heading much higher. Rising yields tend to support the dollar as they reflect stronger growth. They also enhance the attractiveness of some dollar-denominated assets to investors.
In late afternoon New York trading, the euro fell to $1.3365 against the dollar, down 0.09 percent on the day, but above the session's low of $1.3251, according to Reuters data. Also weighing on the euro were worries about the ability of certain eurozone countries to sell an abundance of debt. Portugal is expected to refinance 11 billion euros worth of debt and Spain 32 billion euros worth in the first quarter, according to BBH's McCormick.
Manufacturing in the United States and Europe accelerated in December, while growth in China and India slowed to a more sustainable level, helping to fuel a move by investors into riskier assets. The data helped the euro outperform some currencies. It rose 0.64 percent against sterling to 86.27 pence and gained 0.45 percent versus the yen to 109.12 yen.
The dollar rose 0.63 percent against the yen to 81.66 yen. The dollar was down 0.05 percent against the Swiss franc to 0.9330 francs, after dropping to an all-time low of 0.9301 on Friday. The euro was down 0.16 percent against the Swiss franc at 1.2468 francs, still some distance away from its record low at 1.2398 francs hit last week.
Greg Anderson, senior currency strategist at CitiFX in New York, said markets are "expecting further US economic outperformance in the first quarter," which would be dollar-positive.
He also expects further losses in the euro starting this week "until the market is satisfied with the outcomes for Portugal and Spain." Anderson added that the currency market will more or less have the same theme as last year, "with the euro being sold off because of the eurozone debt crisis." The euro ended 2010 around 6.5 percent lower against the dollar, its biggest annual drop since 2005, weighed down by the debt crisis that hit Greece and Ireland.