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Dollar firms as investors keep eagle eye on Fed guidance

The U.S. dollar held gains against major currencies on Wednesday as investors looked to the U.S. Federal Reserve's policy meeting for indications it could start rate hikes earlier or let bond yields rise further.



Against the yen, the greenback firmed 0.1% to 109.085 yen, hovering near nine-month highs hit this week. The euro was flat versus the dollar after declining within the past three sessions.



With Fed policymakers expected to forecast the fastest U.S. economic growth in decades within the wake of COVID-19 vaccinations and $1.9 trillion in new stimulus, market participants are going to be focused on cues that the central bank could start raising interest rates in 2023, before it had said.



"It is probably going that the FOMC's economic forecasts will acknowledge the improved growth picture this year, but will still show an extended road toward conditions according to maximum employment that might put sustained pressure on inflation," Morgan Stanley (NYSE:MS) strategist Matthew Hornbach said.



"The Fed being more dovish than expected would suggest U.S. yields and therefore the dollar moving lower within the near term, particularly against risk currencies, but we still see upside risks for USD into 2Q."



The dollar index stood at 91.908, having risen for 3 straight sessions on support mainly from elevated U.S. bond yields. [US/]



The euro changed hands at $1.1902, but the common currency could test last week's 3 1/2-month low of $1.18355 on a possible delay in vaccinations.



Europe's medicines watchdog will release results of its investigation into incidents of bleeding, blood clots and low platelet counts in recipients of AstraZeneca (NASDAQ:AZN)'s corona virus vaccine on Thursday afternoon.



"Depending on the result, it could hurt the euro zone's business sentiment further and therefore the euro could face fresh selling pressure on the low vaccination theme," said Daisuke Uno, chief strategist at Sumitomo Mitsui (NYSE:SMFG) Bank.



The British pound was down about 0.1% at $1.3886 in Asian trading on Wednesday. The currency has come struggling from profit-taking after it hit a near three-year high last month on the rear of a quick vaccine roll-out.



Commodity-linked currencies including the Australian dollar, the New Zealand dollar and therefore the Canadian dollar eased slightly against the U.S. dollar, tracking weakness in commodity prices. [MET/L] [O/R]



In the crypto currency market, bit coin fell 2.2% to $55,665.45, slipping further faraway from a record high of $61,781.83 hit on Saturday.

 

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Dollar Up, Even After Fed Sticks to Dovish Tone in its Policy Decision

The dollar was up on Thursday morning in Asia, with the U.S. Federal Reserve System saying it had been in no rush to boost interest rates through all of 2023 even after predicting a V-shaped recovery within the U.S. economy.



The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.10% to 91.483 by 9:42 PM ET (1:42 AM GMT) but was at its lowest level in two weeks.



The USD/JPY pair was up 0.24% to 109.09.



The AUD/USD pair lost 0.37% to 0.7823 and therefore the NZD/USD pair inched up 0.07% to 0.7245. New Zealand’s GDP posted a surprise contraction of 1% quarter-on-quarter during the fourth quarter of 2020 earlier within the day.



The USD/CNY pair edged down 0.14% to 6.4948 and therefore the GBP/USD pair inched down 0.10% to 1.3950.



Fed Chairman Jerome Powell stuck to his dovish tone as he handed down the Fed's latest policy decision on Wednesday, putting paid to speculation that the central bank would pull back its stimulus as hopes rise for a powerful economic recovery.



“It was the standard Jay in any case ... markets are thinking the Fed will raise rates perhaps once next year and a few of more times in 2023... There’ll remain questions over whether the Fed can control inflation,” State Street (NYSE:STT) Bank Tokyo Branch Manager Bart Wakabayashi told Reuters.



The Fed also predicted that the economy would grow 6.5% in 2021, the most important annual jump in GDP since 1984 and a 2.3 percentage point’s difference from its projection three months ago.



Inflation is predicted at 2.4%, above the Fed’s 2% target. However, seven of 18 Fed officials now expect higher rates in 2023, compared to 5 in December 2020.



The Fed’s comments also sent the ten-year U.S. Treasuries yield on a roller-coaster ride, with yields at around 1.648% during the Asian session.



Some investors remain concerned about potential further market volatility, however.



“While our view remains that movements in yields through the latter a part of February and into March are like a ‘taper-less tantrum’, there's potential for further market volatility, perhaps around ‘data tantrums’ over the approaching months,” Goldman Sachs (NYSE:GS) Asset Management macro strategist Gurpreet Gill said during a note.



In other central bank news, the Bank of England is widely expected to go away its benchmark bank rate at a historic low of 0.1% and its bond-buying program unchanged when it hands down its policy decision later within the day. The Bank of Japan will hand down its own policy decision on Friday.

 

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Dollar Edges Higher; Treasury Yields Rise After Powell's Comments

The dollar pushed higher in early European trading Thursday, helped by rising U.S. Treasury yields even after the Federal Reserve System reiterated that it had been in no hurry to boost interest rates while predicting strong growth within the world’s largest economy.

At 3:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was up 0.2% at 91.602, climbing from the low of 91.295 seen earlier within the session.

USD/JPY was up 0.3% at 109.18, near the nine-month high hit earlier in the week, because the Bank of Japan starts its two-day policy meeting, ending on Friday. A Nikkei report earlier Thursday said the BOJ is predicted to slightly widen an implicit band at which it allows long-term interest rates to move around its 0% target.

EUR/USD fell 0.2% to 1.1957, but shortly faraway from its one-week high of 1.1989, while the risk-sensitive AUD/USD climbed 0.2% to 0.7812.

Chairman Jerome Powell made it pretty clear, as he handed down the central bank's latest policy decision on Wednesday that the Fed would be sticking to its easy money policies for a few time, even while predicting a powerful economic recovery and a jump in inflation above target.

The Fed predicted that the economy would grow 6.5% in 2021, the most important annual jump in GDP since 1984 and a hefty increase from the 4.2% growth projected just three months ago. It saw core personal consumer expenditures - its favored measure of inflation - at 2.2% by the top of the year, and remaining marginally above 2% for following two years.

The yield on the benchmark 10-Year U.S. Treasury note climbed above 1.73%, its highest level in additional than a year, providing support for the greenback within the wake of Powell’s dovish comments.

“Four out of eighteen FOMC members see a rate hike in 2022 compared to just one in December,” said analysts at Nordea, during a research note, “which is differently of showing that the Fed has turned more upbeat, but they continue to be extremely cautious in terms of sounding just barely tightening biased and a transparent consensus still refrains from hinting of any hikes in the least.”

Elsewhere, GBP/USD fell 0.1% to 1.3948, having gained around 0.5% overnight. The Bank of England isn't expected to vary its monetary policy stance when it meets later Thursday, but it probably will emphasize its horizontal bar for tightening monetary policy whilst the economic outlook brightens.

Looking at the emerging markets, USD/TRY rose 0.8% to 7.5601, before a meeting by Turkey’s central bank, which is predicted to end in an increase in borrowing costs. The Indonesian rupiah was stable after Bank Indonesia left its key rate unchanged, while the Brazilian real was holding on to a 0.8% gain after the Brazilian central bank delivered the most important interest-rate increase in additional than a decade so as to tame inflation, hiking by 75 basis points to 2.75%, and becoming the primary Group of 20 country to lift rates this year.

USD/BRL rose 0.1% to 5.5845 in early European trading.

Most economists see the central bank lifting its benchmark rate of interest by 100 basis points to 18%, so as to combat soaring inflationary risks given the recent rises in oil prices and lira volatility.

 

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Dollar Edges Lower; Remains Elevated as Yields Rise

The dollar edged lower in early European trading Friday, but remains at elevated levels, supported by higher Treasury yields following the Federal Reserve's dovish stance.

At 3:50 AM ET (0750 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was down 0.2% at 91.710, following a 0.5% jump Thursday, the foremost in two weeks.

USD/JPY was down 0.1% at 108.81, falling slightly after the Bank of Japan widened its target band for the benchmark 10-year yield by an implicit 5 basis points. The move that had been trailed within the press and Bo Governor Haruhiko Kuroda downplayed suggestions that it had been tightening its policy.

GBP/USD rose 0.2% to 1.3951, after weakening 0.3% each day earlier on concerns that the U.K.'s vaccination campaign is about to slow. The Bank of England maintained its easy policy stance at its meeting on Thursday and warned the outlook for Britain's recovery remained unclear.

EUR/USD rose 0.1% to 1.1930 after falling around 0.5% Thursday as a 3rd wave of Covid-19 cases hit large parts of Europe, while the risk-sensitive AUD/USD climbed 0.1% to 0.7762.

Federal Reserve Chairman Jerome Powell made it clear earlier in the week that the central bank will maintain its stance of aggressive monetary stimulus, saying a near-term spike in inflation would prove temporary although the Fed is projecting the strongest U.S economic process in nearly 40 years.

This resulted within the benchmark U.S. 10-year yield climbing over 1.75% overnight, its highest level since January 2020, before easing below 1.70% in early European trading.

“The Fed keeps repeating that inflation are going to be allowed to overshoot which they have to check the inflation first before anything associated with tightening are often just barely considered,” said analysts at Nordica, during a research note.

“This will, in our view, allow USD bond yields and inflation expectations to still increase during Q2 (potentially a lot).”

Looking at the emerging markets, USD/RUB fell 0.3% to 74.115 with Russia’s central bank meeting later Friday. It’s expected to stay interest rates on hold at 4.25%, but pressure is building on the central bank to tighten policy as soaring food prices and a sanctions-weakened currency have driven inflation to the fastest pace in four years. Brazil and Turkey, two of the world's biggest emerging markets, both hiked rates by quite expected earlier in the week to rein in inflation.

USD/TRY fell 0.4% to 7.2904, meaning that the lira has gained over 3.5% against the dollar in the week.

“The Turkish central bank made an aggressive 200bp adjustment to the policy rate on the rear of deteriorating global risk appetite, an uptrend in commodity prices and a weakening lira, adding to elevated inflation risks,” said ING analysts, during a research note.

 

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Dollar Edges Lower; Remains Elevated as Yields Rise

The dollar edged lower in early European trading Friday, but remains at elevated levels, supported by higher Treasury yields following the Federal Reserve's dovish stance.

At 3:50 AM ET (0750 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was down 0.2% at 91.710, following a 0.5% jump Thursday, the foremost in fortnight.

USD/JPY was down 0.1% at 108.81, falling slightly after the Bank of Japan widened its target band for the benchmark 10-year yield by an implicit 5 basis points. The move that had been trailed within the press and Bo Governor Haruhiko Kuroda downplayed suggestions that it had been tightening its policy.

GBP/USD rose 0.2% to 1.3951, after weakening 0.3% every day earlier on concerns that the U.K.'s vaccination campaign is close to slow. The Bank of England maintained its easy policy stance at its meeting on Thursday and warned the outlook for Britain's recovery remained unclear.

EUR/USD rose 0.1% to 1.1930 after falling around 0.5% Thursday as a third wave of Covid-19 cases hit large parts of Europe, while the risk-sensitive AUD/USD climbed 0.1% to 0.7762.

Federal Reserve Chairman Jerome Powell made it clear earlier within the week that the central bank will maintain its stance of aggressive monetary stimulus, saying a near-term spike in inflation would prove temporary although the Fed is projecting the strongest U.S process in nearly 40 years.

This resulted within the benchmark U.S. 10-year yield climbing over 1.75% overnight, its highest level since January 2020, before easing below 1.70% in early European trading.

“The Fed keeps repeating that inflation are getting to be allowed to overshoot which they need to see the inflation first before anything related to tightening are often just barely considered,” said analysts at Nordica, during a search note.

“This will, in our view, allow USD bond yields and inflation expectations to still increase during Q2 (potentially a lot).”

Looking at the emerging markets, USD/RUB fell 0.3% to 74.115 with Russia’s central bank meeting later Friday. It’s expected to remain interest rates on hold at 4.25%, but pressure is building on the central bank to tighten policy as soaring food prices and a sanctions-weakened currency have driven inflation to the fastest pace in four years. Brazil and Turkey, two of the world's biggest emerging markets, both hiked rates by quite expected earlier within the week to rein in inflation.

USD/TRY fell 0.4% to 7.2904, meaning that the lira has gained over 3.5% against the dollar within the week.

“The Turkish central bank made an aggressive 200bp adjustment to the policy rate on the rear of deteriorating global risk appetite, an uptrend in commodity prices and a weakening lira, adding to elevated inflation risks,” said ING analysts, during a search note.

 

[UsaForexsignal]

Dollar hits four-month high as worries over European lockdowns, U.S. taxes sap risk appetite

The dollar hit a four-month high on Wednesday as concerns over a 3rd COVID-19 wave in Europe, potential U.S. tax hikes and escalating tensions between the West and China sapped risk appetite.

The dollar index rose to a four-month top of 92.608 in early London trade, its highest since Nov. 23.

The gauge "looks determined to check the highest end of a replacement , higher 91-93 range we expect will form in coming weeks," Westpac strategists wrote during a client note, adding that extended lockdowns in Europe have sapped confidence in an economic rebound.

"Meanwhile, the U.S. will have a powerful rebound in coming months amid a robust vaccine roll-out, stimulus payments and economic reopening," they said.

The index that measures the greenback's strength against a basket of peer currencies is up nearly 3% year-to-date, confounding widely held expectations among analysts for a decline.

Strategists at BCA Research said they believe the U.S. dollar is experiencing a "countertrend rally within a market."

"Over the near-term, the dollar benefits from two supports. First, the U.S. growth will outperform because of generous economic policy and therefore the country’s lead in vaccinations. Second, the NASDAQ and other highflying global equities are correcting since February, creating some risk-off undertones that help the countercyclical greenback."

"However, real rate of interest differentials will ultimately determine the currency’s cyclical outlook. The Fed’s commitment to maintaining an accommodative policy will cap upside to US real rates at the short-end of the curve. This may prevent a pointy appreciation within the dollar.

The euro hit a four-month low of $1.1812 after Germany extended a lockdown and urged its citizens to remain reception during the Easter holiday.

Worries over the pace of the pandemic recovery were heightened after a U.S. health agency said the AstraZeneca (NASDAQ:AZN) Plc vaccine may have included outdated information in its data.

The flight to safety received a further nudge when Treasury Secretary Janet Yelled told lawmakers that future tax hikes are going to be needed to buy infrastructure projects and other public investments.

Yellen was testifying to the House Financial Services Committee along side Federal Reserve System Chair Jerome Powell, who reiterated that an expected near-term spike in inflation is going to be transitory.

That helped tame U.S. Treasury yields, with the benchmark sinking below 1.6% on Wednesday for the primary time during a week, because it continued its retreat from a quite one-year high of 1.7540% touched last week.

Both Yelena and Powell also are scheduled to testify to the Senate Banking Panel on Wednesday.

Human rights sanctions on China imposed by the us, Europe and Britain, which prompted retaliatory sanctions from Beijing, are adding to plug concerns.

The safe-haven yen, which gained in Asian trade, weakened 0.1% by the beginning of trading in London. Australia's dollar - considered a liquid proxy for risk - weakened further on Wednesday.

The Aussie slipped to as low as $0.7582, A level not seen since Feb. 5.

The British pound weakened as far as $1.3675, also rock bottom since early February.

In crypto currencies, bit coin gained 4% to $56,500, off a record high of $61,781.83.

Seasonal factors are likely exacerbating currency moves, as some investors lock in profits before the quarter-end and therefore the holidays of Easter and Passover, consistent with Masafumi Yamamoto, chief currency strategist at Mizuho Securities.

"The main scenario for the market that the worldwide economy is recovering from the pandemic shock is intact," he said.

"We may even see more of a correction into the beginning of April, but then I expect a restarting of a risk-on trade," with commodity currencies of advanced economies benefitting most, he said.

 

[TradeForexcopier]

Forex Market News - Dollar Up Over COVID-19 Worries and Potential U.S. Tax Hikes

The dollar was abreast of Wednesday morning in Asia near a four-month high, as COVID-19 concerns, potential U.S. tax hikes, and tensions over tit-for-tat sanctions between China and therefore the West turned investors towards the safe-haven asset.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.04% to 92.382 by 12:18 AM ET (4:18 AM GMT).

The USD/JPY pair inched down 0.05% to 108.50.

The AUD/USD pair was down 0.21% to 0.7606 and therefore the NZD/USD pair was down 0.30% to 0.6983.

The USD/CNY pair inched up 0.10% to 6.5227. The sanctions imposed on China by the U.S., Europe, and the U.K. over human rights issues, prompting the previous to retaliate with sanctions of its own, still increase investor market concerns.

The GBP/USD pair edged down 0.17% to 1.3727.

The dollar index rose to a two-week high because the Asian session opened and was near the four-month record of 92.506 set earlier within the month. The index “looks determined to check the highest end of a replacement, higher 91-93 range we expect will form in coming weeks,” Westpac analysts said during a note.

“Extended European lockdowns have sapped confidence during a synchronized global rebound; meanwhile, the U.S. will have a powerful rebound in coming months amid a powerful vaccine roll-out, stimulus payments, and economic re-openings,” the note added.

A third wave of COVID-19 cases in Europe prompted fresh lockdowns in several countries. Germany extended its lockdown until Apr. 18, with France and Italy also extending restrictive measures, and therefore the euro fell towards a four-low of $1.18360.

Across the Atlantic, the U.S.’ data safety monitoring board warned that the info submitted by AstraZeneca (NASDAQ:AZN) PLC and therefore the University of Oxford in support of its COVID-19vaccine might be outdated.

Also nudging investors towards safe-haven assets was U.S. Treasury Secretary Janet Yellen’s testimony before the House Financial Services Committee, where she said that future tax hikes are going to be needed to buy infrastructure projects and other public investments.

Federal Reserve Chairman Jerome Powell, testifying alongside Yellen, added that an expected near-term spike in inflation is going to be transitory. His comments prompted the benchmark U.S. Treasury yield to drop to 1.6048% on Wednesday.

Yellen and Powell will repeat their testimonies before the Senate Banking Panel later within the day.

In cryptocurrencies, bitcoin fell below $54,000, but two weeks after hitting a record high of $61,781.83.

 

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Forex Market News- Euro Risks Fall Below $1.18 as Third Covid Wave Hits EU, Experts Warn


The euro fell against the dollar Wednesday and will soon be staring down the barrel of a plunge below $1.18 because the third wave of Covid-19 threatens the outlook for the economic bloc.

EUR/USD fell 0.22% to $1.1823 and will continue its bearish trend because the U.S. appears on target for a stronger recovery because of a speedy vaccine rollout, while the EU finds itself within the midst of lockdowns. There was some reprieve on the lockdown front for Germany, Europe's economic engine, as Chancellor Angela Merkel today scrapped plans for harsher Easter lockdown amid widespread criticism.

"The current uncertainty about the third wave … increases the danger that EUR-USD slips below 1.18," Commerzbank (DE: CBKG) said during a note.

Economic data, meanwhile, is probably going to play second fiddle to the continued pandemic dynamic as many expect economic steps in either direction are unlikely to spark the European central bank into action.

"[W]ith the third Covid wave, the info are likely to still look lukewarm for the present, especially compared to the USA," Commerzbank added. "The data publications became less relevant recently as they are doing not cause a decisive decision on the part of the ECB."

The bank's remarks were supported somewhat because the single currency shrugged off economic data showing better-expected manufacturing output within the bloc.

Data on Wednesday showed stronger manufacturing activity for March. The index for manufacturing rose by 4.6 points to a reading of 62.4, while the index for services rose by 3.1 points to a reading of 48.8.

The euro is headed for its second straight slump against the greenback as traders have continued to trim their bullish bets, consistent with data from the Chicago Futures Trading Commission.

Speculative traders cut their net long positions within the euro by 12,000 to 90,000 for the week ended March 16.

 

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Forex Market News- Dollar Edges Down, But Near Multi-Month Highs Over Signs of Economic Recovery

The dollar was down on Friday morning in Asia but was still hovering near four-month highs as positive U.S. economic data, COVID-19 vaccine rollouts and rising Treasury yields all continued to cap the U.S. currency’s losses.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies edged down 0.13% to 92.790 by 9:47 PM ET (1:47 AM GMT).

The USD/JPY pair inched up 0.05% to 109.33, its highest level since June 2020.

The AUD/USD pair was up 0.31% to 0.7602 and therefore the NZD/USD pair was up 0.32% to 0.6971. The Antipodean risk currencies recovered from their losses earlier within the week and are likely to stay supported due to the 2 countries' success in limiting the economic fallout from COVID-19, consistent with some investors.

The USD/CNY pair inched down 0.04% to 6.5423. The GBP/USD pair edged up 0.16% to 1.3754, with the U.K. to release retail sales figures for February later within the day.

The euro fell against the dollar to $1.1776, the strongest for the greenback since November 2020. Investor sentiment for the only currency has weakened because of fresh lockdowns and delays within the COVID-19 vaccine rollout across the continent.

Although Germany releases its March Ifo Business Climate Index later within the day, which is predicted to point out improved business morale, it's unlikely to prevent the euro’s fall. The slow vaccine rollout and disputes with the U.K. over vaccine exports remain dominant themes for now, consistent with other investors.

There were warnings, however, against chasing the dollar higher from current levels from some corners over worries that the dollar’s gains over the past few weeks are too rapid.

"The euro has broken through the 200-day moving average, which may be a clear sign that it'll still go lower... the yen is getting strong on a number of the crosses, which can cap dollar/yen. Yields have supported the dollar, but this move could start to run out of steam," MUFG Bank head of worldwide markets research Minori Uchida told Reuters.

In the U.S., the amount of initial jobless claims for the week fell to a one-year low of 684,000 from the 781,000 claims filed during the previous week. The amount was also down from the 730,000 claims in forecasts prepared by Investing.com.

Further data, including personal spending in February, is due later within the day and will provide further hints about the U.S. economic strength.

President Joe Biden also pledged to double the U.S. vaccination rollout plan after reaching the previously set goal of 100 million shots 42 days before schedule.

 

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Forex Market News- Dollar Down but Reaches One-Year High Against Yen as Inflation Fears Rise

The dollar was down on Tuesday morning in Asia but reached a one-year high against the yen on Tuesday with climbing Treasury yields, the quickening U.S. COVID-19 vaccination rollout and large U.S. stimulus measures all flaming inflation concerns.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down 0.03% to 92.927 by 10:14 PM ET (2:14 AM GMT), staying near a four-and-a-half month high of 92.964 reached on Monday. The USD/JPY pair edged up 0.11% to 109.91.

The AUD/USD pair edged up 0.18% to 0.7644 and therefore the NZD/USD pair edged up 0.20% to 0.7011.

The USD/CNY pair inched up 0.05% to 6.5714, before China’s release of its manufacturing and non-manufacturing Purchasing Managers Indexes (PMIs) on Wednesday.

The GBP/USD pair inched up 0.10% to 1.3773.

Investor worries about the market impact of Achegos Capital’s collapse also gave the safe-haven U.S. currency a lift, although worries appeared to have died down by the time Asian trading got underway on Tuesday.

The dollar traded as high as 109.89 against the yen on Tuesday, its highest level since March 2020. Also helping the greenback on the trail to its best month since 2016 is that the dollar demand from Japan, as companies begins to face their books at the top of Japan’s financial year in the week.

In Europe, the short-term economic outlook became gloomier as France and Germany introduced tougher restrictive measures to curb a 3rd wave of COVID-19 cases on the continent. Also applying pressure on the euro was the widening spread between U.S. and German bond yields.

The euro remained near the four-and-a-half month low reached on Monday, with March 2021’s decline set to the most important since mid-2019.

On the info front, the U.S. employment report for March, including non-farm payrolls, are going to be released on Friday and closely watched for signs of economic recovery. The Federal Reserve System has cited the labor market’s slow recovery from COVID-19 as a reason for its dovish stance on interest rates.

Some investors were cautiously optimistic.

"In every week when the market is feeling so optimistic about the forthcoming payrolls release, it seems very likely that the greenback will find strong support," with the dollar index looking to check 93, Rabobank currency strategist Jane Foley said during a note.

However, "the market is at risk of pricing in an excessive amount of inflation risk," meaning "we see scope for the dollar to melt within the months ahead," the note added.

Meanwhile, Visa Inc. (NYSE:V) will now allow the employment of crypto currencies to settle transactions on its payment network. The company’s decision pushed bitcoin back near the $57,620 mark on Tuesday, after touching a record $61,781.83 earlier in March.

 

[TradeForexcopier]

Forex Market News- Euro set for biggest monthly drop since mid-2019; yen shorts grow

The euro languished below $1.18 on Monday because the prospect of tougher corona virus curbs in France and Germany weighed on the short-term outlook for the European economy.

The euro slipped 0.2% in London trading at $1.1774, nearing last week's four-and-a-half-month trough of $1.1762. On a monthly basis, it's down 2.3%, its biggest drop since July 2019.

Compounding the single's currency woes are the widening rate of interest differentials between German and U.S. yields. The spread for 10-year debt widened to 200 basis points from 150 bps at the beginning of the year, boosting the dollar.

"In a nutshell, the U.S. economy is way stronger and miles ahead within the immunization game compared to Europe's and Japan's, and this ultimately translates into the Fed normalizing policy years before the ECB or the BoJ," said Marios Hadjikyriacos, a strategist at brokerage XM.

The euro's woes have worsened as Europe's faltering vaccination programmed runs into a wave of latest infections, whilst positioning data showed investors remain heavily long Euros, a bearish sign for investors. And

"Much focus will remain on the virus situation in Europe and whether lockdowns can slow rising case numbers and also whether the slow pace of vaccinations can finally reach exit speed," ING economists said during a daily note.

The dollar held firm against other currencies as a small risk-off sentiment rippled through global markets, with U.S. stock futures in negative territory in quiet quarter-end rebalancing flows.

YEN SHORTS GROW

Against a basket of currencies, the dollar steadied at 92.810, slightly below a November 2020 high of 92.92 hit last week.

Weekly positioning data showed the broad trend of growing dollar bullishness remained in play. Hedge funds cut their overall short dollar bets to their lowest levels since June 2020 while ramping up their bearish bets on the yen.

Short yen positions have grown in recent weeks with hedge funds building their net short bets to 33% of open interest, consistent with ING data.

Steadying stock markets offered some support for the yen, but falling bond yields and expectations of a worldwide economic rebound have rekindled short bets. The yen is among the worst- performing currencies thus far this quarter, down 6% loss the dollar.

Virus-driven caution also helped the dollar higher against the Australian and New Zealand dollars and sterling, and it rose against oil-linked currencies because the re-floating of the ship blocking the Suez Canal pushed crude prices down by about 1.5%.

The Aussie was last down 0.3% at $0.7621 on Monday and therefore the New Zealand dollar had dropped 0.3% to $0.6978. Sterling slipped 0.2% to $1.3767.

 

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Forex Market News- Dollar Up, Reaches Fresh One-Year High Against Yen on U.S. Economic Recovery Hopes

The dollar was abreast of Wednesday morning in Asia, rising to a fresh one-year high against the yen over investor bets that fiscal stimulus and an aggressive vaccine rollout will help the U.S. lead a worldwide economic recovery from COVID-19.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.08% to 93.370 by 9:58 PM ET (1:58 AM GMT). The index held above the 93 mark and was on track for its best month since 2016.

The USD/JPY pair was up 0.25% to 110.62, surpassing the 110 mark.

The AUD/USD pair edged up 0.17% to 0.7607 and therefore the NZD/USD pair inched up 0.07% to 0.6985.

The USD/CNY pair inched down 0.07% to 6.5669 with the Yuan offshore market the weakest since November 2020. China’s manufacturing Purchasing Managers' Index (PMI) for March was 51.9, above the 51 in forecasts prepared by Investing.com and February’s 50.6 reading. The non-manufacturing PMI was 56.6, surpassing its February reading of 51.4.

The Caixin manufacturing and services PMIs, which check out the private sector, are due later within the week.

The GBP/USD pair inched down 0.01% to 1.3737.

U.S. President Joe Biden later within the day will outline how a $3 to $4 trillion infrastructure plan is going to be funded. He also targeted opening the U.S. COVID-19 vaccine program to 90% of american adults by Apr. 19 earlier within the week.

On the info front, Tuesday’s Conference Board CB Consumer Confidence index soared to 109.7 in March, the very best level since the start of COVID-19. Forecasts prepared by Investing.com predicted a 96.9 figure, while the index was at 90.4 in February.

“U.S. economic outperformance can still underpin the dollar within the near term,” Commonwealth Bank of Australia (OTC: CMWAY) currency strategist Carol Kong said during a note.

“The yen are going to be driven by the overall dollar strengthening trend,” potentially rising to 113 by year-end, she added.

The U.S. employment report for March, including non-farm payrolls, is due out on Friday. Investors will watch the figures closely after the Federal Reserve System cited the lackluster market for its continued dovish stance on interest rates. While the Fed’s stance has boosted the economic outlook, it also continues to boost inflation worries.

Rising U.S. bond yields also gave the greenback a lift, with the yield on the benchmark 10-year Treasury note touching a one-year high of 1.776% on Tuesday.

Meanwhile, bitcoin hovered slightly below $59,000, working towards touching its record peak of $61,781.83 set earlier within the month again. PayPal Holdings on Tuesday said it launched a 'checkout with crypto’ service allowing U.S. users to pay online merchants globally with the crypto currency.

 

[TradeForexcopier]

Forex Market News- Dollar gains as U.S. recovery bets stoke Treasury yields

The dollar gained against major currencies on Tuesday and climbed to a one-year high against the yen, as accelerating U.S. vaccinations and plans for a serious stimulus package stoked inflation expectations and raised Treasury yields.

The safe-haven dollar found support across the board as investors also digested the fallout from the collapse of highly leveraged investment fund Arch egos Capital.

The dollar index rose above the 93 mark and was last up around a 3rd of a percent at 93.185, its highest level in four months.

The dollar also rose above 110 yen, A level not seen since March last year, and was last up 0.5% on the day.

It is on target for the simplest month since late 2016, with the top of Japan's financial year this month driving up dollar demand as companies square their books.

Analysts said the yen was also susceptible to higher inflation expectations within the United States than in Japan and an increase in long-term U.S. yields.

Ten-year U.S. Treasury yields rose to 14-month highs on Tuesday, the day before President Joe Biden is about to stipulate how he intends to pay money for a $3 trillion to $4 trillion infrastructure plan.

"USD/JPY has far and away the very best correlation amongst G10 currencies with long-term US yields," said Lee Hardman, currency economist at MUFG during a note.

"Upward pressure on long-term US yields is predicted to be supported by another fiscal stimulus policy announcement from the Biden administration."

The euro weakened on the day to $1.17290, its lowest level since November.

Tougher coronavirus curbs in France and Germany have dimmed the short-term outlook for the European economy. A widening spread between U.S. and German bond yields is adding pressure on the euro.

The monthly U.S. non-farm payrolls report are going to be closely watched at the top of in the week , with Federal Reserve System policymakers thus far citing slack within the labour marketplace for their continued lower-for-longer stance on interest rates.

"In every week when the market is feeling so optimistic about the forthcoming payrolls release, it seems very likely that the greenback will find strong support," Rabobank currency strategist Jane Foley wrote during a report.

However, "the market is at risk of pricing in an excessive amount of inflation risk," meaning "we see scope for the USD to melt within the months ahead," the report said.

 

[UsaForexsignal]

Forex Market News- Dollar holds near multi-month high on U.S. growth bets

The dollar held near a multi-month high against other major currencies on Thursday as investors bet fiscal stimulus and aggressive vaccinations will help the united states grow faster than other economies.

The dollar's index against a basket of six major currencies hit a five-month high of 93.439 on Wednesday and last stood at 93.209.

The gains came because the euro, far and away the most important component within the index, suffers from concerns the euro zone's economic recovery is being hampered by a 3rd wave of COVID-19 infections.

President Emmanuel Macron ordered France into its third national lockdown and said schools would close for 3 weeks while the currency bloc also lagged the United States in vaccination programmers.

The euro changed hands at $1.1726, after hitting a near five-month low of $1.1704.

Against British pound, the common currency hit a 13-month low of 0.8503 pound and last stood at 0.8509.

The U.S. currency held firm against the yen after ending March with its biggest monthly gains since November 2016.

The dollar traded at 110.74 yen, having risen to as high as 110.97, its highest level during a year.

"Rises in U.S. bond yields on hope of vaccine rollouts and monetary stimulus are boosting the dollar, because the dollar/yen is understood to be particularly sensitive to interest rates differentials," said Yujiro Go to, chief FX strategist at Nomura Securities.

"Yen-selling thanks to Japanese companies' foreign direct investment is returning after a slowdown thanks to the pandemic last year," he added.

Japanese conglomerate Hitachi (OTC: HTHIY) on Wednesday announced $9.6 billion acquisition of U.S. software company Global Logic Inc.

Some traders speculated flows associated with the deal might be behind a number of the dollar's recent rises.

U.S. President Joe Biden announced his long awaited $2 trillion-plus job plan, including $621 billion to rebuild infrastructure.

Coupled with his recently enacted $1.9 trillion corona virus relief package, Biden's infrastructure initiative would give the federal government a much bigger role within the U.S. economy than it's had in generations, accounting for 20% or more of annual output.

But the trouble sets the stage for subsequent partisan clash within the Congress where members are divided on the entire size and inclusion of programs traditionally seen as social services.

That leaves big uncertainties on how the plan will find you, helping to stay immediate market reactions to minimum.

"On the detail handy, this new package would definitely be an enormous positive for the U.S. economy if gone by Congress," said Elliot Clarke, senior economist at Westpac in Sydney.

"However, the $2 trillion of the proposed infrastructure and investment initiatives would be spread across eight years. Further, this is often not $2 trillion in net stimulus. Rather it's to be offset over 15 years by a rise within the corporate rate from 21% to twenty-eight also because the rate multi-national companies pay on overseas profits," he added.

While currency trading is predicted to slow towards the Easter holidays in many parts of the planet, the dollar could gain further if upcoming key U.S. economic indicators surprise on the upside.

A survey by the Institute for Supply Management (ISM) on Thursday is predicted to point out an extra improvement within the manufacturing activity.

Economists expect Friday's job data to point out a rise of about 650,000 payrolls in March while the newest chatter within the market is it could swing higher, and even top a million.

The ADP National Employment Report showed on Wednesday U.S. private payrolls increased by 517,000 jobs last month, slightly less than market forecasts.

In the crypto asset market, bit coin maintained its firmness over the past several days to trade at $58,766.

 

[TradeForexcopier]

Forex Market News- U.S. dollar to stay strong for a minimum of another month: Reuters poll

The U.S. dollar will remain strong for a minimum of another month, consistent with a Reuter’s poll of exchange strategists, who still forecast that the currency will weaken within the long run.

Following a spike in benchmark Treasury yields, which touched a 14-month high on Tuesday, the greenback is up about 3.5% this year, a solid revival given it started the year on the defensive.

Trillions of dollars in expected government infrastructure spending and a strong U.S. economic recovery will likely keep bond yields rising and therefore the dollar well-supported within the near-term, forcing reassessments of bets against the currency.

Indeed, the newest trader positioning data showed currency speculators trimming their net short positions to rock bottom level since June 2020.

"We started the year dollar negative both within the short-term and within the long-term but the shift within the environment is so dramatic that staying dollar negative within the short-term was very risky," said Steve Englander, head of G10 FX research at Standard Chartered (OTC:SCBFF).

Over 85% of analysts, or 48 of 56, who answered a further question said the present dollar strength would last a minimum of another month. Of the 48, 11 said it might last three to 6 months and 16 said it might last quite six months.

The other eight said the dollar's revival was already over or would end in but a month.

But beyond short-term outperformance, the March 26-31 poll of over 65 FX strategists in total predicted the dollar would weaken over the 12-month horizon.

Those forecasts line up with a separate Reuter’s survey of fixed-income strategists published last week who weren't expecting sovereign yields to be tons above current levels over the approaching year. [US/INT]

For a graphic on Reuters poll graphic on the EUR/USD and U.S. 10-year Treasury yield outlook:

"I don't think we're getting to have a huge run-up on the dollar within the way we did a few of years ago. I feel we will go a touch bit further," said Jane Foley, head of FX strategy at Rabobank.

Analysts still expect the euro, which marked its worst half-moon performance since 2015 this year, to strengthen against the dollar over subsequent 12 months.

For a graphic on Reuters poll graphic on currency market outlook:

Changing hands at around $1.173 on Wednesday, the euro was expected to trade around $1.20 within the next six months then rise to $1.22 during a year, clawing back the 4.0% it's dropped thus far in 2021.

However, that year-ahead forecast was rock bottom since November and was in danger of an extra downgrade.

Fifteen of 17 analysts who answered a separate question said risks to their euro forecasts were skewed to the downside.

Much of the negative outlook was because the euro zone was lagging its peers in immunizing its population, putting its major economies in danger of more large-scale lockdowns.

"My forecasts are for the euro to travel copy to $1.21 on a 3 to 6 month view, but I'm not feeling comfortable thereupon. I'm starting to think I'm getting to need to bring that lower over subsequent few weeks approximately," added Rabobank's Foley.

Despite the dollar gaining across the board this year, very similar to in previous cycles, it had been emerging market currencies which suffered the foremost.

While they were expected to pare a number of their recent steep losses over the approaching year, there was many selling pressure expected for developing economies' currencies over subsequent 12 months.

Nearly 60% of analysts, or 28 of 48, who answered an additional question said emerging market currencies would underperform over subsequent three months. An identical majority also said a sell-off in risky currencies was likely over subsequent quarter.

"In the very near-term the environment has become tons tougher ... We wouldn't be getting to buy emerging market currencies immediately," said Lee Hardman, senior currency analyst at MUFG, the foremost accurate forecaster for major currencies in 2020.

 

[UsaForexsignal]

Forex Market News- Dollar heads for third weekly gain as payrolls data looms

The dollar steadied on Friday before data from the united states that's expected to point out a rise in job creation and a lower percentage for March, because the the world's largest economy maintains a gentle recovery from the pandemic.

Sentiment for the dollar has improved in recent weeks, while Treasury yields have spiked, because the Biden administrations planned stimulus of over $2 trillion and a rapid COVID-19 vaccine roll out spurred economic optimism also as inflation fears.

While trading is probably going to be muted on Friday with many financial markets shut for Easter holidays, analysts say the dollar's ascent to multi-month highs is probably going to continue as more investors back economic recovery.

"It's not just speculators that are depending on the dollar," said Yukio Ishizuki, exchange strategist at Daiwa Securities. "Asset managers also are cutting their shorts in other currencies to form way for a dollar surge."

"As long because the economy improves and Treasury yields rise, the dollar will too," the strategist added.

The dollar last traded at 110.62 yen, shortly from its strongest level during a year.

Against the euro, the dollar was quoted at $1.1777, near a five-month high.

The greenback was steady at 0.9417 Swiss francs, after losing 0.2% on Thursday.

The British pound was little changed at $1.3843.

U.S. nonfarm payrolls due afterward Friday are forecast to possess jumped by 647,000 in March from a 379,000 in February. The percentage is predicted to fall to six .0% from 6.2%.

The dollar index, a gauge of its value against six major currencies, stood at 92.862, on track for its third consecutive week of gains.

Major currencies aren't expected to maneuver much on Friday with financial markets closed Australia, Singapore, Hong Kong, Britain, Europe and therefore the United States, analysts said.

Elsewhere, the Australian dollar edged up to $0.7629, after falling to a three-month low within the previous session.

Across the Tasman Sea, the New Zealand dollar was quoted at $0.7034.

In the cryptocurrency market, bitcoin briefly raised above $60,000 for the primary time in two weeks on the other hand pared gains to trade up 1.49% at $59,601.

 

[TradeForexcopier]

Forex Market News- U.S. trade chief voices concern to Vietnam over currency practices

U.S. Trade Representative Katherine Tai, during a turn Thursday with Vietnam's minister of industry and trade, highlighted U.S. concerns about Vietnam's currency practices, a USTR statement said.

Tai and therefore the Vietnamese minister Tran Tuan Anh also "discussed U.S. concerns on illegal timber practices, digital trade and agriculture," the statement said.

The U.S. Department of the Treasury in December labeled Vietnam a "currency manipulator" thanks to its growing trade surplus with the United States, its large global accounting surplus and heavy exchange market intervention to carry down the worth of its dong currency.

In January, the USTR released the results of its so-called Section 301 investigation into Vietnam's currency practices. It found Vietnam's actions to down the worth of its currency were "unreasonable" and restricted U.S. commerce, but it didn't take immediate action to impose punitive tariffs.

 

[UsaForexsignal]

Forex Market News- EUR/USD Price Analysis: A move below 1.1700 isn't ruled out


EUR/USD’s bullish attempt falters before the 1.18 mark.
The door remains hospitable a resumption of the downtrend.

EUR/USD fails to re-test the 1.1800 neighborhood on Friday amidst the prevailing consolidative range.

In spite of the bounce seen within the last few sessions, sellers remain on top of things of the worth action round the pair, leaving it susceptible to another move to the YTD lows around 1.1700.

Further south of 1.1700 there are not any relevant support levels until the November 2020 lows within the 1.1600 zone.

While below the 200-day SMA (1.1869) the short-term stance for EUR/USD is predicted to stay negative.

 

[UsaForexsignal]

Forex Market News - Dollar Edges Higher After Treasuries Undermine Recent Strength

The dollar was slightly higher in early trading in Europe, still supported by strong retail sales and market data on Thursday, but still on track to finish the week lower, thanks to falling Treasury yields that are making other currencies relatively more attractive.

Various reports suggest that enormous institutional participants like global macro hedge funds have closed out short positions on U.S. Treasuries in the week, having been convinced that the Federal Reserve System won’t be rushed into tightening monetary policy by a spike in inflation rates over subsequent few months. That spike is nearly as good as guaranteed, thanks to the collapse of oil prices in spring 2020, which is creating an enormous base effect on year-on-year rates.

The euro has been a beneficiary because the yield differential has narrowed – not least because the decline in Treasury yields has gone hand-in-hand with signs of a robust U.S. rebound which will support Europe’s export-sensitive economy.

Base effects were also conspicuous during a 63% year-on-year rise in European car sales in March.

Earlier, the Chinese yuan was left largely unmoved by first-quarter gross domestic product data showing that the economy grew slightly but expected. Quarter-on-quarter growth slowed to 0.6% from 2.6% within the fourth quarter of 2020. The dollar rose 0.1% against the offshore yuan to six .5310 but remains down 0.4% on the week.

The news also weakened the Aussie and New Zealand dollars slightly, but these, too, have also made solid gains against the greenback in the week.

Later Friday, the U.S. Treasury is thanks to release its latest report on currency manipulation. The report is predicted to be used as a chance to signal an end to the previous administration’s policy of talking the currency down so as to narrow the U.S. deficit.

In this context, various reports have suggested that China won't be listed as a currency manipulator, but Taiwan – whose exchange reserves have risen sharply within the last year to prevent an undue appreciation of the TWD – is going to be.

The Russian ruble too is ending the week on a robust note. It rose 0.5% against the dollar to 75.91 after the fresh round of U.S. sanctions clothed less punishing than feared. Although U.S. investors are going to be barred from buying Russian sovereign debt within the primary market, they're going to still be allowed to use the secondary market.

The opposite is true for the lira , which is struggling again after the new central bank governor decided to drop his predecessor’s pledge to stay interest rates high for an extended period of your time to bring inflation down. The dollar rose 1.0% against the lira to eight .0872.

 

[TradeForexcopier]

Forex Market News - Dollar Up, But Set for Weekly Drop as Investors Buy Fed’s Dovish Stance

The dollar was abreast of Friday morning in Asia but was set to finish the week with its worst back-to-back weekly drop by 2021. Treasury yields continued their retreat from more-than-one-year highs as investors increasingly bought into the U.S. Federal Reserve's pledge of continued monetary support.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.10% to 91.713 by 12:59 AM ET (4:59 AM GMT).

The USD/JPY pair inched up 0.06% to 108.81.

The AUD/USD pair edged down 0.16% to 0.7738 and therefore the NZD/USD pair inched down 0.10% to 0.7162.

The USD/CNY pair edged up 0.12% to 6.5296. Chinese economic data released earlier within the day said that the GDP for the primary quarter grew 18.3% and 0.6% year-on-year and quarter-on-quarter respectively in March. Although both figures were less than forecasted, economic process soared on a yearly basis while slowing down on a quarterly basis.

The GBP/USD pair edged down 0.14% to 1.3767.

The benchmark 10-year Treasury yield fell to a one-month low of 1.528% during the previous session, from as high as 1.776% at the top of March 2020, even after Thursday’s stronger-than-expected U.S. retail sales and initial jobless claims data.

San Francisco Fed President Mary Daly also said on Thursday that the U.S. economy remains far away from making "substantial progress" toward the central bank's goals of twenty-two inflation and financial condition when it'll begin to think about reducing its support for the economy.

Investor bets that massive fiscal spending additionally to continued monetary easing will spur faster U.S. economic process and runaway inflation drove the dollar index, alongside Treasury yields, to an almost five-month high on the ultimate day of March. However, investors now seem more willing to simply accept the Fed’s assurance that inflation pressure are going to be transitory and monetary stimulus will remain in situ for years to return.

The dollar is "still struggling to seek out its feet in April, albeit the U.S. macro outperformance narrative couldn't be more propitious," Westpac strategists said during a note.

"The DXY is trading like it's topping out now, before (we) expected,” the note added.

The Russian ruble tumbled during the previous session, losing 2% to the dollar and hitting a quite five-month low versus the euro in volatile trade. The U.S. slapped sanctions against Russia on Thursday after U.S. President Joe Biden authorized the move to punish Moscow’s alleged interference within the 2020 U.S. presidential election. Russia has denied the allegations, however.

In cryptocurrencies, bitcoin traded at $63,478, near the record high of $64,895 reached on Wednesday when cryptocurrency platform Coinbase Global Inc. (NASDAQ:COIN) made its Nasdaq debut.