Amid Brexit concern euro struggles to rise, dollar remains firm

The dollar snapped a two-week losing streak on Monday as strong U.S. jobs data fuelled demand while other currencies were trapped in narrow ranges. The euro struggled to rise above $1.15 as cautious comments from the European Central Bank at its January meeting reaffirmed worries the euro zone economy was struggling. Concern around Brexit weighted on the pound. "Even though we have the Fed tapping on the brakes, we need to see more stability in Europe and clarity on Brexit before these currencies can really meaningfully," said Jeremy Stretch, head of G10 FX strategy at CIBC Capital Markets in London.

Against a basket of other currencies, the dollar edged 0.15 per cent higher at 95.71 after two consecutive weeks of declines. A U.S. Labor Department report on Friday showed non-farm payrolls jumped by 304,000 jobs last month, exceeding forecasts and the largest gain since February 2018. ISM manufacturing activity numbers for January were also better than expected, pointing to underlying strength in the world's biggest economy.

With much of Asia closed by holidays this week, the dollar also took heart from recently concluded trade talks between China and the United States -- it was set for its biggest two-day gain against the yuan in a year. Weak European data and expanding stimulus in China have increased demand for dollars, despite indications the U.S. Federal Reserve has stopped raising interest rates for now.

Rising U.S. yields also boosted the dollar. The benchmark 10-year U.S. Treasury yield was at 2.70 per cent, up from a four-week low of 2.619 per cent last week. The latest positioning data showed speculators increased their net longs on the U.S. dollar to their highest since December 2015, according to calculations by Reuters and Commodity Futures Trading Commission data.

Currency markets stayed in tight ranges in early Asian trade, with the euro trading flat at $1.1454. China's financial markets are closed all week for the Lunar New Year holiday. Other Asian markets are also closed for parts of the week, keeping wider market activity subdued.

Sterling was lower at $1.3062 in early Asian trade. Traders expect the pound to remain volatile as Brexit uncertainty still high. The Bank of England is scheduled to meet later this week and widely expected to keep interest rates steady.

(With inputs from agencies.)