Dollar Shines Amid Passing of $1.9 trillion Stimulus Bill, Robust Jobs Data

EUR/USD Daily Chart

The US dollar gained against its major rivals in early trading on Monday, following a better than expected employment report and after the Senate passed a $1.9 trillion coronavirus relief package. Meanwhile. the rise in Treasury yields unsettled investors in the stock market.

US job growth spiked in February as hiring in restaurants and bars picked up. On Friday, the US Bureau of Labor Statistics reported that 379K new jobs were added in February, beating expectations of 197K. The unemployment rate ticked down to 6.2%, also beating analyst forecasts of 6.3%.

The Senate passed the coronavirus relief package Saturday, which includes $1,400 stimulus checks and $300-per-week jobless benefits through the summer. The House is set to vote on this version of the legislation on Tuesday, before it goes to President Joe Biden to be signed.

Rising bond yields have spooked stock markets. The Nasdaq has turned negative for the year. Higher bond yields dampen the appeal of stocks. High flying tech stocks have been hit especially hard, such as Tesla (TSLA) which has now fallen 30% from its high.

Investors are selling bonds as they increasingly expect an economic rebound and rising inflation this year. Bond yields move inversely to bond prices.

Last week, Federal Reserve Chairman Jerome Powell maintainted the central bank’s promise to hold interest rates near zero and continue with its monthly bond buying. He signaled the intent to not change monetary policies until the economy is “very far along the road to recovery.” However, some investors think that central banks may begin to be change policy sooner than expected.

Looking at the EUR/USD daily chart above, we can see that the pair has fallen to its lowest levels since late November. The ‘line in the sand’ 200-period moving average sits below, currently at around 1.1811. Markets now look to the ECB Press Conference this Thursday and whether the central bank will modify their coronavirus-related stimulus program.