Currencies: Dollar climbs higher as China data look weak

LONDON (MarketWatch) — The dollar maintained its rising trend on Monday as signs pointed to a lackluster outlook for major economies such as China and Japan.

Data released earlier in the day showed that China’s exports slid 15% from a year earlier in March while imports dropped 12.7%, pointing to sluggish demand at home and abroad. The drop in exports was far below the median forecast of a 10.0% increase expected. The fall in imports was largely as anticipated.

The Chinese data helped boost the dollar, sending the ICE dollar index DXY, +0.07%  up 0.6% to 99.94. The WSJ Dollar Index BUXX, +0.22%  added 0.6% to 88.64, inching closer to its 2015 closing high of 89.33 hit on March 13.

The disappointing data also pushed the commodity-linked Australian dollar AUDUSD, -1.38%  lower to trade at $ 0.7575 from around $ 0.7680 late Friday in New York.

Meanwhile in Japan, data showed that core machinery orders fell 0.4% in February from the previous month, in a sign of continuing caution among Japanese companies over ramping up capital spending. The yen fell against the dollar USDJPY, +0.11% so that the greenback bought ¥120.66, up from ¥120.30.

The weak Asian data came after Federal Reserve Bank officials made cases last week for the central bank to begin raising short-term interest rates as early as this summer. Their comments supported the dollar, which fell sharply after disappointing U.S. jobs data earlier this month.

At the same time, European government-bond yields have fallen on the back of European Central Bank’s asset-buying program, making dollar-denominated assets more attractive. Money managers tend to shift their assets to countries where they can generate higher yields.

WSJ Market Wrap: April 10, 2015

U.S. stocks rose Friday, as General Electric’s plans to exit most of its lending operations buoyed the Dow industrials and S&P 500. Apple began taking order for its Apple Watch.

“It looks like the nonfarm payrolls data has been forgotten,” said Atsushi Hirano, head of FX sales Japan at Royal Bank of Scotland. “What we are seeing is the combination of European stock buying and European bond buying. This is a typical QE trade.”

The euro EURUSD, -0.17%  fell to $ 1.0526 from $ 1.0606 late Friday and was at EURJPY, -0.11% ¥127.01, compared with ¥127.58.

The pound GBPUSD, +0.14%  fell to $ 1.4601 from $ 1.4633 late Friday, with lingering concerns about the May 7 general election weighing on the sterling.

“It is likely that with less than a month to go to the next General Election, sterling will remain under pressure against the dollar,” said Angus Campbell, senior analyst at FxPro, in a note.

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