THE US dollar has risen for the second consecutive day against the yen thanks to increased optimism for the US recovery – factory orders are falling at a slower pace than expected and the labour market is also starting to show a glimmer of improvement. Following the latest fall in weekly jobless claims, analysts are upping their expectations for a better non-farm payrolls number this Friday, which could lead to further upside for the dollar. Capital Spreads is quoting ¥82.12-¥82.14 on US dollar-yen.

Better-than-expected mortgage approvals and the UK purchasing managers’ index (PMI) data combined with the prospect that interest rates may be hiked sooner than expected has lent support to the pound lately. But whether the rally can be sustained remains to be seen.

Much will depend on the non-farm payroll figure due at the end of the week. The high level of volatility that has been seen in recent months makes this release a difficult one to call. A slightly negative number has the potential to support the pound, but a big decline could certainly initiate another round of investors exploiting the greenback’s perceived safe haven status. The current IG Index price on sterling-dollar is $1.5613-$1.5615.

The Swiss franc was a big loser for the first time in a long while yesterday as reports of aggressive macro fund buying pushed the safe haven currency lower. Euro-Swiss franc gained 160 basis points to SFr1.2634, dollar-Swiss franc added 100 basis points to SFr0.9430 and sterling-Swiss franc rocketed some 200 basis points to SFr1.4757, helped by the stronger UK PMI figures. Spread Co is currently offering spreads on euro-Swiss franc of SFr1.2637-SFr1.2640, dollar-Swiss franc of SFr0.9437-SFr0.9440 and sterling-Swiss franc of SFr1.4758-SFr1.4765.

With doubts over the future of the euro still hanging around from the end of last year, the dollar has been performing well against the single currency so far in 2011. The robust US Institute for Supply Management's manufacturing data, which was published on Monday, showed the highest levels for six months. This positive news sparked a rally in the greenback in yesterday’s trading, which pushed the pair close to the important resistance level of $1.3420 in the morning. This level could well remain a psychological barrier for foreign exchange traders. Cantor Index is offering a spread of $1.33952-$1.33962 on euro-dollar.