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Dollar dips as crude oil surge supports commodity currencies

The dollar was shackled on Tuesday by a combination of weak U.S. economic data and gains for commodity-linked currencies such as the Canadian and Australian dollars which drew support from an extended surge in crude oil prices.

The dollar index against a basket of six major currencies inched down 0.05 percent to 97.001 after losing 0.35 percent the previous day, marking its biggest daily decline since March 20.

On top of the pressure from buoyant commodity-linked currencies, the dollar was weighed by data showing U.S. durable goods orders declined in February and a bounce in the euro as investors squared positions ahead of a looming European Central Bank meeting.

“The dollar’s strength peaked out towards the end of last week, when the U.S. jobs data showed that wage increases had slowed. The currency hasn’t been able to find traction since,” said Shin Kadota, senior strategist at Barclays in Tokyo.

“And the latest bounce in U.S. yields did not provide much lift for the dollar as they still remain at low levels in absolute terms.”

The 10-year Treasury yield bounced to 2.52 percent, edging further away from a 15-month low of 2.34 percent plumbed at the end of March.

The yield was still significantly below its recent highs around 2.8 percent hit in early March.

The Canadian dollar was little changed at C$1.3312 per dollar after gaining more than 0.5 percent overnight.

The Australian dollar was steady at $0.7128 having risen 0.3 percent the previous day.

Oil prices have surged to five-month highs on expectations that global supplies would tighten due to fighting in Libya, OPEC-led cuts and U.S. sanctions against Iran and Venezuela.

“Themes such as U.S.-China trade talks and Brexit are turning rather stale and no longer providing the currency market with as much incentive. The rally in crude gave the market something to focus on under such conditions, ” said Bart Wakabayashi, Tokyo branch manager at State Street Bank.

The Norwegian kroner held to its gains and stood at 8.543 per dollar after rallying 0.7 percent the previous day on higher crude.

The kroner was also boosted after Norges Bank Governor Oeystein Olsen said on Monday that the central bank will continue to hike interest rates over the coming months.

Oil-rich Norway stands alone among other developed economies in tightening monetary policy, thanks to rising crude prices and higher-than-anticipated economic growth and inflation.

The euro was effectively flat at $1.1265 after advancing 0.4 percent on Monday, when it ended a two-day losing streak.

The pound edged up 0.1 percent to $1.3078, having traded in a narrow range so far this week, reflecting nervousness in the market about key Brexit talks between British Prime Minister Theresa May and the opposition Labour Party.

Britain is due to leave the European Union on Friday but May is seeking a compromise with the Labour Party regarding terms for Brexit ahead of an EU leaders’ summit on Wednesday.

May heads to Berlin and Paris on Tuesday to meet German Chancellor Angela Merkel and French President Emmanuel Macron before setting out the case for another delay at Wednesday’s EU summit in Brussels.

The dollar shed 0.1 percent to 111.37 yen to put additional distance between a three-week peak of 111.825 scaled on Friday.

Euro nears one-month lows as caution grows

The euro sat near a one-month low hit last week as investors grew cautious about the outlook for the currency before a European Central Bank meeting this week.

Traders cut their long euro positions by their biggest margin in nine months last week, according to weekly positioning data as core European bond yields entered negative territory and as PMI data indicated a euro zone economy struggling to gain traction.

“We are seeing more euro scepticism in the market as expectations of an ECB rate hike has changed from the foreseeable future, with no firm timeline in sight,” said Ulrich Leuchtmann, a currency strategist at Commerzbank in London.

While the single currency was slightly higher on the day at $1.1228, it remained within striking distance of a one-month low of $1.1183 hit last week.

No policy changes are expected at this week’s ECB meeting, but the press conference afterwards will be in sharp focus amid talk of tiered rates to ease pressure on banks, global recession fears and a sense of alarm that pushed 10-year German bond yields below zero percent for the first time since 2016.

Risk appetite was broadly muted across the currency markets with the yenstronger and the Australian dollar weaker as concerns about the outlook for the global economy weighed on sentiment.

The dollar was also weighed down by softening bond yields. The greenback was 0.3 percent lower at 111.385 yen after briefly popping up to a three-week high of 111.825 on Friday following the U.S. jobs report.

The Australian dollar dipped 0.1 percent to $0.7095 in the wake of declining prices of commodities such as copper.

The pound held near a one-week low as France and the Netherlands expressed doubt about May’s plan to further delay Brexit. Sterling last traded at $1.3050 for a gain of 0.1 percent.

Trade optimism supports dollar ahead of jobs report

Optimism for a U.S.-China trade deal helped the dollar hit a three-week high against the yen on Friday, although moves in broader foreign exchange markets were limited as investors saw a lot of headlines but no conclusions out of the trade talks.

Xinhua reported that Chinese President Xi Jinping had said progress was being made in trade talks with Washington and called for an early conclusion of negotiations.

U.S. President Donald Trump said on Thursday a deal could be announced in about four weeks, but warned it would be difficult to let China trade with the United States if remaining issues were not resolved.

The dollar rose to a three-week high of 111.8 yen per dollar while holding firm against most other currencies. The offshore yuan also rose 0.2 percent to 6.7065.

Against a basket of currencies the dollar was flat, however, and the European session opened with most major currencies trading in tight ranges.

The focus for the day is U.S. labour market data due out at 1230 GMT, which will help traders decide how the U.S. economy is holding up. MUFG analysts said the market was “struggling for direction” before the jobs report.

Expectations are for a rebound in jobs growth in March and a weak February. ING analysts said that should the data show 160,000 to 170,000 jobs were produced in March the dollar would gain.

“Such an NFP (non-farm payrolls) release should prove slightly positive for the dollar against the low-yielders ($/JPY to 112.20), but probably good for risk assets in general – confirming that US domestic demand should stay strong and allaying recession fears,” they said in a note.

The euro rose slightly to 1.1228, its gains capped after data released on Thursday showed German industrial order dropped in February.

Sterling strengthened back towards $1.31 as a senior European Union source said Donald Tusk was likely to offer Britain a flexible extension of the date of the country’s exit from the bloc of up to one year.

The pound was up 0.2 percent at $1.3093.

The Australian dollar rose 0.2 percent to $0.71245.

The currency has risen this week, supported as signs of progress in the U.S.-China trade dispute lifted risk assets and commodity prices

Yen eases on trade optimism, sterling edges up after Brexit vote

The yen eased and the euro held firm to the dollar on Thursday as hopes of a trade deal between the United States and China lifted risk appetite globally, while the sterling gained after the UK parliament approved legislation to seek a Brexit delay.

The safe-haven yen touched a two-week low of 111.575 yen against the dollarlate on Wednesday. The pair were last quoted at 111.42 yen, little changed on the day.

The euro was up 0.1 percent to the U.S. dollar at $1.1240. The single currency had fallen to its lowest levels in more than three weeks on Tuesday and neared $1.1177, which, if broken, would send the currency to its weakest level since June 2017.

Trade talks between the United States and China made “good headway” last week in Beijing and the two sides aim to bridge differences during talks that could extend beyond three days this week, White House economic adviser Larry Kudlow said.

He said China had recognized problems for the first time during the talks that the United States has raised for years, referring to intellectual property theft, forced transfer of technology from U.S. companies doing business in China and others.

The White House also announced President Donald Trump will meet later on Thursday (at 2030 GMT) with Chinese Vice Premier Liu He in Washington.

Sterling gained on Wednesday as Prime Minister Theresa May sought a Brexitcompromise with opposition leader Jeremy Corbyn in a last-ditch effort to end a national crisis.

The lower house of the British parliament approved legislation which would force May to seek a Brexit delay to prevent a potentially disorderly departure on April 12 without a deal.

The pound last stood at $1.3170, up 0.1 percent on the day.

“On the whole, there is a risk-on mood in the market. Upticks in Chinese data and headlines on progress in U.S.-China trade talks are behind this sentiment,” said Kyosuke Suzuki, director of forex at Societe Generale.

“But the market has already priced in expectations that Washington and Beijing will soon reach a deal, so it’s questionable how much further currencies can move.”

U.S. economic data published on Wednesday fell short of market expectations, hindering the U.S. dollar.

Services sector activity hit a more than 19-month low in March and private payrolls grew less than expected, underscoring a loss of momentum in the economy that supports the Federal Reserve’s move to suspend interest rate hikes this year.

The reports on Wednesday came on the heels of some modestly upbeat data earlier in the week, including retail and motor vehicle sales and manufacturing.

Investors are worried about a sharp slowdown in economic growth in the first quarter.

“It looks like traders have decided to downplay some weak U.S. data for now, at least until the non-farm payrolls report due on Friday, and to focus on positive things and developments,” said Kengo Suzuki, chief FX strategist at Mizuho Securities.

Positive risk sentiment helped boost the commodity-linked Australian and New Zealand dollars.

The Aussie dollar firmed 0.1 percent to $0.7165, while the New Zealand dollar crawled up 0.2 percent to $0.6787.

Yen slips, Aussie rises as worries recede over US-China trade

The yen slipped and the Australian dollar rose on Wednesday as concerns over the U.S.-China tariff war receded further following a Financial Times report that the two sides have resolved most of the issues standing in the way of a trade deal.

The yen was a touch lower at 111.455 per dollar after brushing 111.53, its weakest since March 20.

The Japanese currency, a perceived safe-haven, is often sold when risk aversion abates in the broader markets.

“The latest trade-related headlines are adding to the ‘risk-on’ mood in the markets,” said Koji Fukaya, president of FPG Securities in Tokyo.

“That said, the overall response by currencies has been calm so far, as few expected U.S.-China trade negotiations to actually end in acrimony. We now need to see whether any agreement on trade issues can lead to an amendment in recently subdued economic views.”

The Australian dollar gained 0.35 percent to $0.7097, trimming a bulk of the losses suffered the previous day in response to the Reserve Bank of Australia’s policy decision.

The RBA on Tuesday left interest rates unchanged as expected but its statements were seen by some as hints towards a shift to easier monetary policy going forward.

The Aussie climbed 0.55 percent to 79.17 yen.

“Major central banks are embracing dovish rhetoric, which supports ‘risk on’ in the markets. The yen stands to remain on the defensive under such conditions,” said Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.

The Australian dollar is sensitive to shifts in risk sentiment and also reacts to expectations towards the economic fortunes of China, the country’s main trading partner.

The dollar index against a basket of six major currencies was down 0.1 percent at 97.236, having lost some traction after climbing a 3-1/2-week peak of 95.517 the previous day.

The greenback had reached that high as ebbing risk aversion in the broader markets pushed up long-term U.S. yields from 15-month lows.

The sharp bounce by Treasury yields ran out of steam, however, slowing the dollar’s advance in turn.

The pound was effectively flat at $1.3136.

Sterling had gained 0.25 percent the previous day after Prime Minister Theresa May said she would seek another Brexit delay to work with the opposition Labour leader on an alternative EU divorce deal, a last-ditch gambit to break an impasse over Britain’s departure.

The euro nudged up 0.15 percent to $1.1224 after slipping overnight to $1.1183, its lowest since March 8, weighed by a decline in German bund yields.

German yields have been anchored below zero as the deadlock over Brexit has fueled investor demand for the safe havens.

Sterling falls as British lawmakers fail to find an alternative to Brexit

Sterling fell across the board on Monday as uncertainty rose after British lawmakers failed to find a convincing majority for any alternative option to Prime Minister Theresa May’s Brexit deal.

Lawmakers grabbed control of the Brexit process for a second day on Monday in order to try to find a majority for an alternative way forward that could break the parliamentary deadlock.

But with no clear majority emerging for any of the indicative votes, traders dumped the British currency on concerns that Britain may fall out of the European Union without negotiating a deal on April. 12.

Sterling fell to $1.3048, down nearly 1 percent from levels before the decision on the vote. Against the euro, it fell by a similar margin to 85.84 pence.

Dollar bounces, set for steepest rise in five months even as growth slows

The dollar was poised on Friday for its strongest gain in five months as investors responded positively to a bounce in U.S. Treasury yields and as some of its rivals were hit by dovish signals from their own central banks.

With many currencies on the defensive, the dollar has weathered a decline in benchmark Treasury yields to a 15-month low. Against a basket of key rival currencies, the U.S. currency was a shade higher at 97.217.

The index was on track for a more than one percent rise in March, its best monthly performance since gaining 2.1 percent in October last year. It has risen 1.5 percent from a near two-month low of 95.74 brushed on March 20.

The dollar held strong even as data overnight showed the U.S. economy slowed more than initially thought in the fourth quarter of last year.

U.S. gross domestic product increased at a 2.2 percent annualized rate, the Commerce Department said on Thursday, down from the initial estimate of 2.6 percent.

The euro and sterling have fallen this week as yields affecting the currencies have plunged, Daiwa Securities’ senior currency strategist Yukio Ishizuki said.

“It feels like the impact of the decline in yields in those markets was larger,” Ishizuki said.

“Though U.S. yields have dropped, investors seem to have sold currencies from markets about which they have the biggest worries about the state of the economy. That seems to have lifted the dollar,” he added.

The euro was a tad higher at $1.1228 but remained down about 1.2 percent for the month in the wake of sliding yields and fears of a prolonged economic slowdown hitting the euro zone.

The single currency has also been weighed down by speculation the European Central Bank will introduce a tiered deposit rate, providing a sign that policymakers plan to keep interest rates low for longer.

Sterling licked its wounds on Friday, last trading up 0.2 percent at $1.3065 after sinking more than 1 percent overnight as the prospects for a swift agreement on Brexit faded.

Against the yen, the dollar tacked on a tenth of a percent to 110.77 yen. That put it on track for a 0.5-percent loss against the Japanese currency in March.

On Friday, official data showed Japan’s industrial output rose 1.4 percent in February from the previous month, up for the first time in four months, though that came after a sharp 3.4 percent slump in January.

The country’s jobless rate fell in the same month to 2.3 percent, underscoring a tight labor market despite tepid wage gains and inflation.

Investors will be focused on developments in the U.S.-China trade talks on Friday.

“Investors are hoping for some signs of progress to bolster sentiment, although indications from the U.S. are that this will now be a long process,” said Nick Twidale, chief operating officer at Rakuten Securities Australia.

“Expect more risk off trade conditions if this looks set to be another step in a lengthy process,” he said in a note.

China will sharply expand market access for foreign banks and securities and insurance firms, especially in its financial services sector, Premier Li Keqiang said on Thursday, as U.S. officials arrived in Beijing for trade talks.

Earlier, sources told Reuters that China has made proposals in talks with the United States on a range of issues that go further than it has previously.

Increased risk appetite helped lift the Australian dollar, with the Aussie last advancing a sixth of a percent to $0.7086.

Market participants will also be watching Federal Reserve policymakers scheduled to speak later in the day.

The 10-year U.S. Treasury note yield edged up to 2.405 percent, extending its rise after coming off a 15-month low of 2.340 percent touched overnight.

Dollar edges up as more central banks turn dovish, defies lower bond yields

The dollar edged up on Thursday as many of its peers weakened after more central banks shifted to dovish policy stances amid a deteriorating global economic outlook.

The latest switch came from the Reserve Bank of New Zealand (RBNZ), which stunned markets on Wednesday by saying the next move in rates is likely to be down, joining a growing list of central banks that had turned dovish.

The dollar index against a basket of six major currencies was 0.1 percent higher at 96.879 and headed for its third day of gains.

With many of its peers going on the defensive, the dollar has been able to brush aside a decline by benchmark U.S. Treasury yields to 15-month lows.

“Treasury yields are indeed lower. But this isn’t impacting the dollar very much as Treasury yields are still at attractive levels relative to those in the euro zone and now New Zealand, which has just turned dovish,” said Takuya Kanda, general manager at Gaitame.Com Research Institute.

“So it is currencies like the euro, which is being dragged down by negative German yields, and the New Zealand dollar, which are suffering losses and allowing the dollar to rise in turn. ”

The euro was a touch higher at $1.1253. The single currency has still lost 0.45 percent this week with the benchmark 10-year bund yield having fallen to 2-1/2-year low of minus 0.09 percent.

The euro’s upside was limited after European Central Bank President Mario Draghi said a hike in interest rates could be further delayed.

Growth-sensitive currencies have taken a beating recently on rising risks to the global economy, highlighted by the shakeout in U.S. bond yields, which markets have read as a signal of a future recession.

The New Zealand dollar crawled up 0.25 percent to $0.6815, after sliding 1.6 percent the previous day.

The Australian dollar, which often moves in sympathy with the kiwi, added 0.15 percent to $0.7096. The Reserve Bank of Australia last month abandoned its long-held tightening bias and markets there are pricing in a cut this year.

The Aussie had shed nearly 0.7 percent on Wednesday along with the plummeting kiwi.

The pound was flat at $1.3188 after going as low as $1.3143 earlier on Thursday.

Sterling was capped after an offer by British Prime Minister Theresa May to quit to get her European Union divorce deal through parliament failed to win over key opponents of the agreement.

Britain was supposed to leave the bloc on Friday but Brussels agreed last week to put back the divorce date until April 12 to give it a chance to resolve a three-year crisis that has split the country down the middle.

However, it still remains uncertain how, when or even if the United Kingdom will leave the EU.

Daisuke Karakama, chief market economist at Mizuho Bank in Tokyo, said the prospect that Brexit could be scrapped altogether through another referendum is a potential risk that could weigh on the yen.

“A second referendum resulting in ‘remain’ would fuel risk appetite and cause the yen to be sold. The shock from such an outcome could equal that of the first referendum,” Karakama added.

The yen, a perceived safe haven, had rallied hard in June 2016 when Britain chose to leave the EU through a national referendum, causing massive risk aversion in the financial markets.

The yen was 0.3 percent firmer at 110.19 to the dollar amid a slide in Japaneseshares, but it was still some distance away from a six-week peak of 109.70 scaled on Monday.

The 10-year U.S. Treasury note yield slipped to 2.34 percent, its lowest since December 2017, on worries about a global recession and after the RBNZ embraced a dovish tone on interest rates.

New Zealand dollar slides as central bank signals possible rate cut

The New Zealand dollar dropped 1.6 percent on Wednesday after the central bank flagged a possible cut in interest rates, becoming the latest set of policymakers to turn dovish.

The signal also weighed on the Australian dollar, which dropped half a percent.

“The market was taken by surprise by the dovish tone (of the Reserve Bank of New Zealand),” Thu Lan Nguyen, an analyst at Commerzbank said. “Most central banks have turned dovish. Even those that hiked interest rates did it with a very cautious outlook on rates.”

The U.S. Federal Reserve abruptly ended three years of monetary policy tightening last week amid signs of an economic slowdown. The European Central Bank, Reserve Bank of Australia and the Bank of Japan have all turned dovish this year, while China’s central bank began loosening policy in 2018.

The kiwi fell 1.6 percent to below $0.68 after the RBNZ left rates unchanged and said its next move would probably be lower.

The Australian dollar weakened half a percent to $0.71.

Currency markets were quiet elsewhere. The U.S. dollar recovered as Treasury yields came off recent lows. Against a basket of currencies, the dollar index was up 0.1 percent to 96.832.

The euro was little changed at $1.1267. European Central Bank President Mario Draghi said on Wednesday that policymakers could delay a planned interest rate hike again if necessary, but dovishness has already been priced into the single currency, analysts said.

“Bids for the dollar are returning with Treasury yields off their lows, and also because negative views towards the European economy have done no favours for their currency,” said Shin Kadota, senior strategist at Barclays in Tokyo.

The pound edged down 0.15 percent to $1.3185, retracing its earlier gains in the face of the stronger dollar.

Britain’s parliament has taken control of the Brexit process from Prime Minister Theresa May for a day, and lawmakers will on Wednesday vote on different Brexit options, looking for a way to break its deadlock over how to leave the European Union.

The Japanese yen was little changed against the dollar, trading at 110.59 yen.

Euro steadies as surveys hint at economic recovery

The euro steadied on Tuesday after economic surveys showed tentative signs of a recovery in the euro zone economy but warning signs from bond markets continued to unnerve investors.

The euro held around $1.13 and analysts said a stronger-than-forecast German business confidence survey on Monday was buoying the single currency.

But German 10-year bund yields remained below zero and that worried global stock markets despite some steadying on Tuesday.

The euro has remained in a fairly narrow range of $1.12-$1.16 in 2019 despite a marked slowdown in the euro zone economy that has prompted fresh stimulus from the European Central Bank.

“We expect EUR/USD to stabilize around the current level of 1.13 and see a limited downside for the rest of week,” said currency strategists at ING.

The dollar rebounded modestly after global markets recoiled on Monday in the wake of an inversion in the U.S. Treasury yield curve, which has signalled a recession in the past.

Meanwhile the Swiss franc, which tends to strengthen during times of economic and political turmoil, neared a 20-month high versus the euro of 1.12.

Appreciation in the so-called safe-haven franc is being driven by risk aversion as a result of concerns about the global economy and could prompt the Swiss National Bank (SNB) to intervene to weaken the currency.

“In case of a no-deal Brexit the 1.10 level is likely to be reached very quickly again. And in fact we would then expect the SNB to intervene in the markets, preventing a stronger collapse of the EUR-CHF exchange rate,” said Ulrich Leuchtmann, head of forex research at Commerzbank in Frankfurt. “Even franc appreciation to 1.10 against the euro is likely to be annoying enough considering the SNB’s efforts to stabilise inflation in positive territory.”

The franc on Monday was marginally weaker versus the euro at 1.1234.

Sterling was effectively flat at $1.3197 after spending the previous day confined to a narrow range when British lawmakers wrested control of the parliamentary agenda from the government for a day in a highly unusual bid to find a way through the Brexit impasse.

They will now vote on a range of Brexit options on Wednesday, giving parliament a chance to indicate whether it can agree on a deal with closer ties to the European Union.