Jan 03, 2022 06:31AM ET
By: AnalysisWatch
The dollar advanced against its major peers on Monday as positive market sentiment on Monday boosted European equities and government bond yields on the first trading day of 2022.
However, with London, Europe's main currency trading centre, closed for the holiday, volume was expected to remain limited.
While the surge in coronavirus cases caused by the Omicron variant continued to affect global travel and public services, hopes were high that the economic damage of strict lockdowns could be avoided.
The dollar index, which measures the greenback against major currencies, rose 0.12% to 95.79, while the pan-European STOXX 600 hit a new record high and US stock futures pointed to a positive session on Wall Street.
The Japanese yen briefly fell back to 115.36 per dollar, its lowest level since late November, but then gradually rebounded to 115.15.
The euro slipped 0.21% to $1.1345, while the benchmark 10-year German yield briefly rose about four basis points to -0.138%, its highest level since November.
A survey showed supply bottlenecks slowed German manufacturing in December, but manufacturers with full order books expressed confidence those bottlenecks would ease in 2022, a survey showed.
Across the eurozone, manufacturing activity remained robust as factories benefited from an easing of supply chain bottlenecks and stocked up on raw materials at a record pace.
The heavy issuance of eurozone government bonds was also expected to put upward pressure on yields.
Markets expect the European Central Bank to maintain its cautious stance while the US Federal Reserve and the Bank of England tighten monetary policy.