Dollar Spikes Up On U.S. Stimulus Expectations

The U.S. dollar appreciated against its major counterparts in the Asian session on Thursday, as solid ADP private payrolls data released overnight triggered hopes of a labor market recovery, while the House's approval of a budget resolution cleared the path for the COVID-19 relief plan.

Data from the payroll processor ADP showed on Wednesday that U.S. private sector employment increased much more than expected in January.

ADP said private sector employment jumped by 174,000 jobs in January after decreasing by a revised 78,000 jobs in December. Economists had expected employment to rise by 49,000 jobs.

All important U.S. nonfarm payrolls data is due on Friday.

Economists expect the employment to increase by 50,000 jobs in January after falling by 140,000 jobs in December.

The unemployment rate is expected to hold steady at 6.7 percent.

The U.S. House of Representatives passed the budget resolution in a 218-212 vote on Wednesday, with the Senate vote scheduled later this week.

After the passage in both chambers, Democrats will start crafting a budget reconciliation bill, which would allow them to push stimulus legislation.

The U.S. treasury yields were higher on stimulus optimism, with the benchmark 10-year treasury yield rising to its highest in over three weeks.

The greenback firmed to 1.3588 against the pound, its highest level since January 19. The greenback is seen finding resistance around the 1.31 mark.

The greenback climbed to near a 3-month high of 105.26 against the yen, from Wednesday's closing value of 105.03. On the upside, 108.00 is possibly seen as its next resistance level.

The greenback strengthened to more than 2-month highs of 0.9012 against the franc and 1.2000 against the euro, from yesterday's closing values of 0.8989 and 1.2035, respectively. The next possible resistance for the greenback is seen around 0.92 against the franc and 1.18 against the euro.

The greenback reversed from an early 2-day low of 0.7648 against the aussie, with the pair trading at 0.7620. The greenback may possibly challenge resistance around the 0.72 level.

The U.S. currency edged up to 1.2809 against the loonie from yesterday's close of 1.2784. Against the kiwi, the greenback bounced off to 0.7190, from its priow low of 0.7225. If the greenback rises further, 1.32 and 0.70 are likely seen as its next resistance levels against the loonie and the kiwi, respectively.

Looking ahead, U.K. construction PMI for January and Eurozone retail sales for December are due out in the European session.

The Bank of England's monetary policy announcement is due at 7:00 am ET. The Monetary Policy Committee is widely expected to hold the key rate at a record low of 0.10 percent and the quantitative easing programme at GBP 875 billion.

The U.S. weekly jobless claims for the week ended January 30 and factory orders for December are scheduled for release in the New York session.