NEW YORK: The US dollar spiked higher against the euro on Monday, erasing early losses in what traders and strategists said is a result of thin holiday trading conditions.
A dismal US jobs report on Friday had cast a pall over the greenback in the last two trading sessions, both of which excluded much of Europe and Latin America markets due to the Easter holiday.
Trading desks are expected to be back at full strength on Tuesday and may fully address the disappointing nonfarm payrolls report which throws into question the timing for a US interest rate increase. "We're not seeing a news trigger.
Liquidity was already thin so it could be anything from an algo(rithmic) trade to someone misjudging how much they could jam through the market," said one trader who requested anonymity because they are not authorized to speak for their bank.
The euro tumbled from around $1.09685, near the unchanged mark on the day, to a loss of 0.50 percent at the $1.0917 level in the span of about 40 seconds just after 3 p.m. (1900 GMT), on the EBS trading platform. It ultimately hit a session low $1.0910.
As the US market closes and Asia has yet to open, the euro traded off 0.31 percent at $1.0940. Earlier the euro had tested the $1.1040/50 range but failed to break through that resistance level.
"The market is underweight dollars and looking for opportunities to buy dollars because even with the weak NFP number last month I really don't think that is going to change the trend for the dollar, which is buy on dips," said Lane Newman, director of foreign exchange for ING Capital Markets in New York.
The euro slid against the Japanese currency as well, plumbing session lows around 130.50 yen before recovering ground to trade up 0.17 percent at 130.73 yen.
The dollar built steady gains on the Japanese yen throughout the day, trading up 0.50 percent to 119.515 in late activity, but off the session high 119.685 yen.
Against the Canadian dollar the greenback trimmed its losses as well, trading unchanged at C$1.2482. This puts it near the bottom of its C$1.24 to C$1.28 range that has been in place since the end of January.
"At these levels dollar/CAD is a buy," said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York.
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