Cautious optimism supports dollar ahead of ECB

By Tom Westbrook

SINGAPORE (Reuters) – Fragile investor confidence supported the dollar and weakened the yen on Wednesday but currency markets kept to tight ranges ahead of series of major central bank meetings over the next week.

Investor focus for now is centered on the European Central Bank’s meeting on Thursday, which is expected to push interest rates even further into negative territory.

The ECB could set the tone for upcoming rate-setting decisions by the U.S. Federal Reserve and the Bank of Japan next week, and for the broader global risk appetite.

For now, a cautious risk-on mood has prevailed after political crises that had hobbled markets, from Britain to Hong Kong, abated, taking the shine off safe-haven assets.

Bonds slid overnight and the yen hit 107.65 per dollar, its lowest since Aug. 1.

Overhanging the relief buying, however, are signs of a slowdown in global demand, which have offset recent positive developments in U.S.-China trade negotiations.

The euro (), which has shed 3% since June, was flat at $ 1.1047. The dollar was flat against the Australian dollar at $ 0.6860 and steady on the yen and the New Zealand dollar .

“Expect a quiet day of trading, with some support of risk, as a broader cyclical rotation continues,” Australia and New Zealand Banking Group analysts said in a note.

“Speculation over whether the ECB will enact a new QE program on Thursday continues to ebb and flow.”

ECB policymakers are leaning toward a package that includes a rate cut, a pledge to keep rates low for longer and compensation for banks over the side-effects of negative rates, five sources familiar with the discussion said last week.

On the other hand, concerns have been building that global central banks are reaching the limits of their stimulus options, especially those with negative interest rates and sub-zero long-term sovereign bond yields.

“Given the chance that the ECB fails to match market expectations for easing policy, the balance of risks favors higher EUR/USD and European FX outperformance,” ING forex strategists said in an overnight note.

Much of the positive mood in recent days has been driven by optimism that a high-level meeting of U.S. and Chinese negotiators at Washington next month can deliver some sort of trade-war circuit breaker.

That was tamped down somewhat by White House trade advisor Peter Navarro on Tuesday, when he urged patience about resolving the two-year trade dispute between the world’s two largest economies and said to “let the process take its course.”

But the prospect of a breakthrough stoked appetite for Asian currencies such as the trade-exposed South Korean won , which drifted higher in Asian trading hours and to around 1189.50 per dollar, close to its highest since Aug. 2.

The yen, already under pressure as investors spurned safe havens, was further sold overnight after Reuters reported BOJ policymakers are more open to discussing the possibility of expanding stimulus at their board meeting on Sept. 18-19.

And the pound has held on to last week’s gains after British parliament passed a law compelling Prime Minister Boris Johnson to seek a delay to the Oct. 31 date for leaving the European Union. Sterling last traded at $ 1.2353.

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U.S jobs data supports dollar as fragile risk-on mood holds

By Tom Westbrook

SINGAPORE (Reuters) – Encouraging U.S. economic data gave the dollar an edge over its peers on Friday, arresting a recent flight from the greenback while also supporting Asian currencies as investors toned down recent gloom over the global economy.

Separate surveys suggested the world’s largest economy is in better shape than investors had feared. U.S. service sector activity accelerated in August and private employers boosted hiring beyond expectations.

It contributed to a broad risk-on shift in money, bond and stock markets stoked by news that China-U.S. trade talks would resume next month, and supported the dollar.

“Stronger than forecast employment, factory orders and productivity numbers contradicted the recent ‘slowing U.S. economy’ narrative,” said Michael McCarthy, chief strategist at brokerage CMC Markets in Sydney.

The dollar recouped some losses against the Australian and New Zealand dollars and against a basket of currencies clambered off a one-week low to hold flat around 98.419.

Traders now await the government’s monthly payrolls report due at 1230 GMT on Friday for the next snapshot on the labor market’s health.

“Investors are now hoping they can take this week’s positivity over the finishing line, so fingers crossed the August U.S. payroll report…doesn’t throw a damp towel on the proceedings,” said Stephen Innes, Asia Pacific  Market Strategist at AxiTrader.

Other factors supporting risk sentiment were a potential breakthrough in the Hong Kong political crisis and reduced chances of Britain crashing out of the European Union on Oct. 31 without a deal.

The pound rose to its highest level against the dollar in more than a month and held most of those gains to trade around $ 1.2326 in Asian hours.

That was in spite of more political chaos in Britain, as Prime Minister Boris Johnson’s plan to kick off what is in effect an election and a Brexit campaign was overshadowed on Thursday when his younger brother quit the government.

The euro () was steady at $ 1.1031 at 0030 GMT. The yuan gained overnight and held in morning offshore trade around 7.1382 per dollar. The trade-exposed South Korean won hit a month high of 1,198.40 per dollar.

Sentiment has been skittish, however, since the Brexit project remains up in the air and previous progress on U.S.-China trade negotiations has failed in the past.

The yen, which was sold to a one-month low of 107.22 per dollar on Thursday, bounced a little to 106.98, a signal some caution remains.

“These moves may prove to be short term rather than the start of a fresh cycle,” said Nick Twidale, director of Sydney-based brokerage XChainge.

“Both the major geo-political issues that seem to have turned over the last few days have a large degree of uncertainty associated with them over the medium, let alone long term,” he said, referring to Brexit and U.S-China trade talks.

“We’ve seen a lot of activity on the frequent flyer accounts of both the Chinese and US trade negotiation teams before which has resulted in little in the way of progress.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Forex – Dollar Falls vs High-Yielders as Yuan Supports Risk Assets

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Investing.com – The U.S. dollar fell sharply against higher-yielding currencies Thursday but rose against haven currencies as upbeat Chinese trade data and better-than-expected jobless claims went some way to restoring global risk appetite.

The , which measures the greenback’s strength against a basket of six major currencies, rose 0.1% to 97.422 by 10:12 AM ET (14:12 GMT), after reaching an earlier high of 97.507. But that modest move disguised losses of over half a percent against units such as the and emerging currencies not in the basket, such as the . The dollar gained against the partially reversing losses over the last two days.

Meanwhile, weekly fell, indicating that the slowdown in the U.S. economy still hasn’t reached at least some parts of the labor market.

Initial claims fell to 209,000 for the week ended August 3, the Labor Department said on Thursday. Data for the prior week was revised to show 2,000 more applications received than previously reported.

Overnight, new data showed that China’s exports rose 3.3% in July, the biggest jump in four months, while imports fell 5.6% on the year, which was less than expected. The data helped ease concerns over a currency war after China let its slide to its lowest in over a decade.

Market expectations for another Federal Reserve rate cut in September remain, with other central banks around the world also easing monetary policy. New Zealand, India and Thailand cut interest rates this week as the spillover from the U.S.-China trade conflict, along with more local issues, hurt their economies.

The Japanese yen, which is seen as a safe-haven in times of market turmoil, inched higher with down 0.1% to 106.10. The euro gained across the board amid reports of the German government looking favorably on a possible stimulus package, with rising 0.1% to $ 1.1200, while slipped 0.1% to $ 1.2123.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Forex – U.S. Dollar Flat as Inflation Supports Fed Rate Cut

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Investing.com – The U.S. dollar pared back earlier gains after tame inflation data supported the case for the Federal Reserve to cut interest rates.

The , which measures the greenback’s strength against a basket of six major currencies, was up 0.05% to 96.690 by 10:15 AM ET (14:15 GMT), after reaching an earlier high of 96.757.

edged up 0.1% in May and was up 1.8% on the year, slipping from the Federal Reserve’s 2% target.

Traders have been speculating on the possibility of the central bank cutting rates due to slowing inflation and rising trade tensions after Fed Chairman Jerome Powell signaled the bank would “act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2% objective.”

The Fed is expected to keep rates unchanged at its meeting on June 19, with an 83.2% chance of a cut priced in for its July meeting, according to Investing.com’s .

The dollar was lower against the safe-haven Japanese yen, with falling 0.1% to 108.40 as trade tensions lingered. President Donald Trump said he had no intention of a trade deal with Beijing absent concessions on five major, but unspecified, points.The comments appear to reduce the chance of a deal if the two leaders meet at the G20 summit on June 28-29.

Elsewhere, the euro inched down, with falling 0.1% to 1.1315. Sterling was higher, with gaining 0.1% to 1.2734, while rose 0.04% to 1.3282.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Forex – U.S. Dollar Flat as Wage Inflation Supports Fed Rate Pause

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Investing.com – The greenback remained unchanged on Friday as wage inflation in the U.S. supported the Federal Reserve’s pause on interest rate hikes.

The , which measures the greenback’s strength against a basket of six major currencies, rose 0.02% to 96.947 as of 10:07 AM ET (14:07 GMT).

rose more than expected, but average hourly earnings grew at a slower pace than anticipated, indicating that inflation pressure has decreased. The numbers support the Fed’s decision to extend its pause on hiking rates.

Meanwhile, trade talks were in focus, as the U.S. and China conceded that progress had been made. Still, the U.S. President Donald Trump declined to announce a trade summit with Chinese leader Xi Jinping, saying it would be at least four or more weeks until a trade deal was signed.

The dollar rose against the safe-haven yen, with gaining 0.04% to 111.68.

Elsewhere, sterling fell even as the U.K. has asked the European Union for yet another extension until June 39. The U.K. had originally been due to leave the EU on March 29, but the deadline was pushed back to April 12 to allow the U.K. parliament more time to approve the withdrawal agreement, which it has been unable to do.

slumped 0.4% to 1.3026.

Elsewhere, rose 0.2% to 1.3381 and inched up 0.04% to 1.1222.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Forex – U.S. Dollar Drops as Data Supports Fed Rate Hike Pause

Investing.com – The U.S. dollar drifted lower on Wednesday as economic data stateside reinforced the Federal Reserve’s current neutral stance on interest rates, while currency pairs moved on economic and political news abroad.

At 11:30 PM ET (15:30 GMT), the , which measures the greenback’s strength against a trade-weighted basket of six major currencies, dropped 0.21% to 96.70.

Producer prices in the U.S. rose only marginally in February, showing a similar increase to the consumer price index and adding to signs that inflationary pressure was muted.

Durable goods orders did show the strongest growth in six months in January, but were insufficient to change the outlook that the American economy has been losing momentum in the first part of the year.

Subdued inflation and slowing growth provides little impetus for Fed Chief Jerome Powell to change his promise that the central bank would maintain a “patient, wait-and-see approach”.

The U.S. dollar was generally weaker across the board on Wednesday with most of the focus on .

The pound received a boost as the U.K. parliament once again rejected British Prime Minister Theresa May’s deal with the European Union.

The British parliament will hold another vote at around 3:00 PM ET (19:00 GMT) in which it is expected to shut down any possibility of the U.K. leaving without a deal, which would likely lead to a proposal for the March 29 deadline to be delayed.

The also traded higher against the greenback after economic data showed stronger-than-expected industrial production for the eurozone in February.

To the contrary, the was under pressure as a reading of consumer confidence hit its lowest level in more than a year in March. The , tightly linked to the Aussie, also headed lower against the American currency.

The Japanese yen showed little movement with trading unchanged at 111.34.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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