FX Rate News

The dollar started the week pinned near two-week lows on Monday as traders questioned whether the recovery from the pandemic in the United States would be as fast as expected.

Bitcoin remained volatile, retreating to as low as $45,914.75 a day after reaching a record $49,714.66.

The world’s most popular cryptocurrency had rallied 25% last week, driven by endorsements from Tesla and BNY Mellon.

The dollar index slipped 0.1% to 90.336, close to last week’s low of 90.249 — a level unseen since Jan. 27.

The gauge hit a two-month top of 91.6 on Feb. 5 on hopes that a U.S. rebound would outpace other major economies, but has since pulled back amid disappointing employment data.

“Now the market is looking for actual evidence that the U.S. economy is outperforming,” said Shinichiro Kadota, senior currency strategist at Barclays Capital in Tokyo.

“The economic data needs to improve.”

The euro edged 0.1% higher to $1.21315, extending last week’s 0.6% advance.

The dollar rose 0.1% to 105.04 yen, recovering some of the previous week’s 0.4% loss.

Many financial markets in Asia remained closed on Monday for Lunar New Year, with the United States also out for Presidents Day.

Riskier currencies gained against the greenback, with the Australian dollar adding 0.3% to 77.795 U.S. cents after earlier touching a one-month high of 77.85.

The British pound appreciated 0.3% to $1.3895 after renewing an almost-three-year high at $1.3901.

The Chinese yuan reached its strongest level since June 2018 at 6.4012 per dollar in the offshore market.

In cryptocurrencies, bitcoin last traded 3.7% lower at $46,852.

Rival virtual coin ethereum, which often trades in tandem with bitcoin, slumped 4.3% to $1,725. It reached a record high of $1,874.98 on Saturday.

The dollar dropped to two-week lows on Wednesday in choppy trading, led by losses against sterling and the euro, weighed down by U.S. data showing tepid inflation and a slippage in Treasury yields.

U.S. benchmark 10-year yields were last at 1.136%, down 2 basis points from Monday’s level. The dollar extended losses after data showed U.S. underlying inflation remained benign. Excluding the volatile food and energy components, the CPI was unchanged for a second straight month. Tame inflation data made it more likely the Federal Reserve would keep interest rates ultra-low.

“The momentum for the dollar right now has turned a little bit lower,” said Erik Nelson, macro strategist at Wells Fargo in New York.

“We’re not ready to throw in the towel on our view of a short-term bullish trend for the dollar. But our conviction on that view has lessened a bit. It seems that there has been a perceptible shift toward momentum.” The dollar index drifted to a two-week low of 90.36, and set for a third day of losses. It last traded 0.2% lower at 90.324.

Traditionally viewed as a safe-haven, the dollar has sunk against major peers as optimism over monetary and fiscal support, robust corporate earnings and coronavirus vaccines bolstered risk sentiment.

Bitcoin, meanwhile, consolidated recent gains on Wednesday, trading 3.7% lower at $44,799. It hit a new high of $48,216 on Tuesday following Tesla’s disclosure of a $1.5 billion investment in the virtual currency.
Rival virtual currency ethereum, which often moves in tandem with bitcoin, reached a record $1,839 on Wednesday before pulling back slightly. It was last down 3.8% at $1,706.

Sweden’s crown strengthened to a one-month high of 10.0406 crowns per euro ahead of the central bank’s interest rate decision, then pared some of those gains after the bank kept monetary policy unchanged as expected. Foreign exchange traders have been waging a tug-of-war over the impact on the dollar of U.S. President Joe Biden’s planned $1.9 trillion fiscal stimulus package.

On one hand, it is expected to speed a U.S. economic recovery, bolstering the currency. But on the other, it could heat up inflation which would lift riskier assets at the dollar’s expense.

After a strong start to the year for the greenback, the latter view appears to be regaining sway, with last week’s U.S. jobs data providing the turning point, according to Westpac analysts.

The dollar gained 0.1% against the yen to 104.67 yen. The Japanese currency earlier hit its highest against the greenback since Jan. 29.

The euro edged up to $1.2132, adding to a three-day gain and hitting its highest since the start of February. The British pound set fresh three-year highs of $1.3865 and was last up 0.3% at $1.3847.

The dollar languished near its lowest in a week on Tuesday as investors began entertaining doubts about the scale of a recent rally driven by expectations of a faster pandemic recovery in the United States than elsewhere.

The spotlight remained on bitcoin as it reached a record above $47,000, building on a nearly 20% surge overnight that was the biggest since 2017, after Tesla Inc announced a $1.5 billion investment in the digital asset.

The dollar index against a basket of major currencies has vacillated around 91 since disappointing U.S. jobs data on Friday knocked the wind out of a two-week run that had lifted it to a more than two-month high of 91.6. It last traded at 90.935.

Investors had pushed up the greenback thanks to a faster U.S. vaccine rollout relative to most other countries, and as Democrats moved to fast-track President Joe Biden’s $1.9 trillion COVID-19 relief package.

Many analysts, though, see that massive fiscal spending coupled with continued ultra-easy Federal Reserve monetary policy dragging down the dollar in the longer term.

“The bottom line is a large stimulus is highly likely to pass soon, exacerbating the widening in the U.S. current account deficit, and weighing on the USD,” Commonwealth Bank of Australia currency analyst Joseph Capurso said in a client note.

Europe’s “lagging” vaccination program will cap the euro near-term but the continent should catch up by the summer, after which the single currency could rally to $1.28 for the first time since 2014, he said.

The euro was little changed at $1.2055 in early Asian trading on Tuesday, up from the two-month low of $1.9520 touched Friday.

The dollar was mostly flat at 105.21 yen, after climbing to 105.765 at the end of last week for the first time since October.

Elsewhere, Tesla sent bitcoin surging by saying in its 2020 annual report on Monday that it had bought $1.5 billion of the world’s most popular cryptocurrency as part of its broad investment policy, and that it expected to begin accepting the digital asset as payment for its products “in the near future.”

“This is a turning point for how we view digital currencies,” said Junichi Ishikawa, a foreign-exchange strategist at IG Securities in Tokyo.

“From here on, bitcoin will be genuinely considered as an asset available for selection by asset managers in their portfolios.”

Bitcoin traded at $47,073 after pushing to a new record at $47,565.86 on Tuesday.

Rival coin ethereum changed hands at $1,746.50 after reaching an unprecedented $1,784.85 on Monday.

U.S. jobs data caused some investors to scale back bets on a rebound in the greenback.

The euro held gains versus the dollar but faces a test later on Monday with data that is expected to show German industrial output growth slowed at the end of last year.

Speculators have been reducing short positions in the dollar, but some analysts say better U.S. economic data and continued progress in fighting the coronavirus pandemic will be needed for further dollar gains.

“Soft non-farm payrolls has really pulled the ladder out from under the dollar,” said Yukio Ishizuki, foreign exchange strategist at Daiwa Securities.

“Now the markets are questioning whether the dollar can rise any further. A lot depends on the coronavirus, but we also need to know when U.S. fiscal stimulus will pass.”

Against the euro, the dollar traded at $1.2048 after a 0.7% slump on Friday.

The British pound bought $1.3736, close to an almost three-year high.

The dollar was quoted at 105.38 yen, having pulled back from a three-month high reached on Friday.

The U.S. economy created fewer jobs than expected in January while job losses the previous month were deeper than initially reported, data at the end of last week showed.

The release of U.S. consumer prices and consumer sentiment later this week will help determine whether a recent rise in inflation expectations and Treasury yields was justified.

Any disappointing numbers from either report could knock the dollar lower, some analysts warn.

The dollar index against a basket of six major currencies stood at 91.084, nursing a 0.6% loss from Friday.

Speculators’ net bearish bets on the dollar fell to $29.95 billion for the week ended Feb. 2, compared with a net short position of $33.81 billion for the previous week, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data.

In the cryptocurrency market, ethereum fell 3.88% to $1,615, extending a pullback from a record high ahead of the listing of ethereum futures on the Chicago Mercantile Exchange.

Bitcoin, the most popular cryptocurrency, fell 0.88% to $38,936.

Elsewhere, the Australian dollar held steady at $0.7678. Across the Tasman Sea, the New Zealand dollar edged up to $0.7209.

The dollar climbed toward a fifth straight daily gain on Thursday on confidence in the U.S. economic outlook and the possibility that Friday’s jobs report will be stronger than expected.

The U.S. dollar index rose 0.5% in New York afternoon trading to 91.509, up 1.7% for the year and its highest level in two months.

The move came with a 0.6% decline in the euro, which fell to $1.1966, below what had seemed a resistance level of $1.20 earlier this week. It was its first move below $1.20 since Dec. 1.

The dollar also gained 0.4% against the yen, rising to 105.53, the highest level since Nov. 11.

After the dollar index lost 7% last year, its gains since December have come on short covering and a view that the U.S. economy’s recovery from the COVID-19 pandemic will be stronger than in other countries.

“There’s a fundamental shift here in the short term where we are seeing the U.S. economic outlook really overpowering what we are seeing in the euro zone,” said Ed Moya, senior market analyst at OANDA.

That view was reinforced on Thursday when the U.S. government said the number of Americans filing new applications for unemployment benefits decreased last week.

Initial claims for state unemployment benefits totaled a seasonally adjusted 779,000 last week, better than economists had forecast and better than 812,000 in the prior week. The government will release on Friday its payroll job count for January, and economists are expecting a gain of 50,000 after a December decline of 140,000.

The dollar’s move came as longer-term U.S. Treasury yields rose on Thursday as investors positioned for a large pandemic relief package from Washington and a stabilizing U.S. labor market.

Longer-term U.S. Treasury yields rose as traders positioned for a large stimulus package from Washington. The 10-year yield was up one basis point in afternoon trading at 1.14% and at one point reached 1.16%, its highest since Jan. 12.

Democrats in the U.S. Senate were poised for a marathon “vote-a-rama” session aimed at overriding Republican opposition to President Joe Biden’s $1.9 trillion COVID-19 relief proposal.

At the same time, the British pound dove as much as a half percent on the day ahead of scheduled comments by the Bank of England about the possibility of negative interest rates and then rebounded to trade up 0.3% after the central bank comments.

The bank said it would ask banks to get ready for the possibility of negative rates, but indicated that financial markets should not expect sub-zero borrowing costs for at least six months, if at all.

It added that while it expects Britain’s economy to probably shrink by 4% in the first three months of 2021, it should recover rapidly towards pre-COVID levels over the year.

“The thing to monitor is how quickly Europe can get out the vaccine. If we see continued slowness there, you will see the gap widen between euro and dollar,” said Justin Onuekwusi, portfolio manager at Legal & General.

Cryptocurrency ethereum, which had gained 10% on Wednesday, slipped as much as 1% on Thursday after reaching an all-time high of $1,698.56 ahead of the launch of ethereum futures on the Chicago Mercantile Exchange next week.

Bitcoin was also off 1% on Thursday at $37,320.

Cryptocurrencies are gaining traction with more mainstream investors and their total market value topped $1 trillion for the first time in January.

The dollar traded near a two-month high versus the euro on Wednesday as investors looked to a widening disparity between the strength of the U.S. and Europe’s pandemic recoveries.

The view was bolstered by moves in Washington toward fast-tracking more stimulus spending that contrasted with concerns about extended European lockdowns and expectations for a decline in euro zone growth this quarter.

The dollar was little changed at $1.2038 per euro early in the Asian session, after strengthening to $1.20115 overnight for the first time since Dec. 1.

The broader dollar index was mostly flat at 91.081 after rising to a two-month high of 91.283 in the previous session.

The greenback’s advances come despite a rise in equities amid improving risk sentiment, defying the currency’s historic inverse directional relationship with stocks.

However, many analysts expect the correlation to reassert itself as the year progresses, and for the dollar to decline as global growth recovers amid massive fiscal stimulus and ultra-easy monetary policy.

“The relative growth dynamics between Europe — weak — and the U.S. — better — are favouring the USD at the moment, but it remains to be seen if this can be a longer-lasting theme,” wrote National Australia Bank FX strategist Rodrigo Catril, who expects the euro to weaken below $1.20 in the near-term.

The dollar also benefited from a massive bout of short-covering, especially against the yen where hedge funds had racked up their biggest short bets against the greenback since October 2016.

The U.S. currency was little changed at 105.025 yen after gaining to 105.17 overnight for the first time since Nov. 12.

Many see the dollar’s rebound since early last month as a correction after its relentless decline last year, although some think the dollar’s new-found firmness could reflect a retreat of the bearish sentiment on the currency.

The dollar index has rebounded 1.2% this year after an almost 7% decline in 2020.

“The bear case is facing a short-term stress test,” Westpac strategists wrote in a note.

“Our base case is that without short-term yield support there’s a limit to how far U.S. recovery optimism can boost the USD,” they wrote. “Global reflation and the Fed’s determined dovish stance limits upside potential beyond that.”

The dollar hovered near a seven-week high on Tuesday, benefiting from a euro selloff overnight after coronavirus lockdowns choked consumer spending in Germany, and on short-covering in the over-crowded dollar-selling positions.

The euro sank the most in 2-1/2 weeks on Monday after data showed retail sales in Europe’s biggest economy plunged by more than forecast in December, with the continent still struggling with vaccine rollouts.

“When people think about selling euros, invariably you get some buying of dollars, because the euro-dollar exchange rate is easily the most liquid in the world,” said Commonwealth Bank of Australia currency analyst Joseph Capurso.

A buy back into the U.S. currency was long overdue, some analysts said, with speculators’ net dollar selling near a 10-year peak.

Speculators have bet on a fall in the safe-haven U.S. dollar as the Biden administration’s proposed 1.9 trillion stimulus has encouraged investors to put money in riskier assets, even as a group of Republican senators visited the White House to discuss a $618 billion alternative plan.

“Some hedge funds may be forced to unwind their dollar short positions after they got burned by recent short squeeze in some U.S. shares,” said Yukio Ishizuki, senior strategist at Daiwa Securities.

On the whole, global markets remain wary, with institutional investors trying to get to grips with the retail trading frenzy that boosted GameStop Corp and other so-called meme stocks in recent sessions despite no change in their fundamentals.

The dollar index eased a touch by 0.1% to 90.87 amid further gains for Asian stocks but stayed not far from its overnight high of 91.063, its highest since Dec. 10.

The euro edged up 0.2% to $1.20805 after dropping 0.7% on Monday, the most since Jan. 15.

Against the yen, the dollar briefly crossed 105 yen for the first time since mid-November and held firm at 104.875 yen.

Many see the dollar’s rebound since early last month as a correction after its relentless decline — the dollar index lost almost 7% in 2020 — on expectations of a global pandemic recovery amid massive fiscal spending and continued ultra-easy monetary policy.

Yet some think the dollar’s new found firmness could reflect a retreat of the bearish sentiment on the currency.

“U.S. interest rates are perhaps on the rise because of the fiscal stimulus and the fact that U.S. economy is holding up well,” said Moh Siong Sim, currency analyst at Bank of Singapore.

“The weak dollar trend has also stalled, and the drift down in dollar/yen has been part of that trend and it has lost a bit of momentum.”

Elsewhere, the Australian dollar pared gains after the country’s central bank said it will extend its quantitative easing program to buy additional $100 billion of bonds, a decision that many market players thought could wait until next month.

The Aussie last stood at $0.7625, almost flat on the day and off the day’s high of $0.7662.

Technically Chana market is under fresh buying as market has witnessed gain in open interest by 3.05% to settled at 33780 while prices up 12 rupees.

Now NCDEX Chana is getting support at 4474 and below same could see a test of 4448 levels, and resistance is now likely to be seen at 4521, a move above could see prices testing 4542.

Chana yesterday settled up by 0.27% at 4500 as Nafed’s unstable chana releasing strategy continues to affect market directly at a time when area is up by 5 % and the new crop is hardly one and a half month away. Pulses sowing area jumped by nearly 109% to 8.55 lh.

Chana acreage has soared by 115% to 8.03 lh. Nafed continued to fix reserve price and changed it frequently from Rs 5600 to Rs. 5100, again Rs. 5100 to Rs. 4875. Apart from it has offered 5 to 10 % discount over previous MSP on particular centers.

As offtake from central pool is lower, Nafed may decrease price further to vacate storage space for new procurement. It would not allow chana cash market to go up beyond a certain level. Delhi chana is being traded at Rs4550-4650.

Demand is weak. Weather condition in Jan –Feb remains crucial. The latest data shows that the total area of pulses has increased by 7% to 141 lakh hectares. More sowing is done in Maharashtra, Odisha and Jharkhand as compared to last year.

Gram cultivation has increased by about 10%. NAFED to sell Gram PSS Rabi-2020 stock from all the States at or above base prices of Rs. 5100 per quintal in the month of December 2020, it offers an initial quantity of 1.5 LMT of Gram, for the month of December 2020. In Delhi spot market, chana dropped by 35.4 Rupees to end at 4473.95 Rupees per 100 kgs.

Trading Ideas:
–Chana trading range for the day is 4448-4542.
–Chana gained as Nafed’s unstable chana releasing strategy continues to affect market directly at a time when area is up by 5 %
–Pulses sowing area jumped by nearly 109% to 8.55 lh.
–Nafed continued to fix reserve price and changed it frequently from Rs 5600 to Rs. 5100, again Rs. 5100 to Rs. 4875.
–In Delhi spot market, chana dropped  by 35.4 Rupees to end at 4473.95 Rupees per 100 kgs

The dollar edged higher on Friday, heading for a weekly gain, as lingering jitters about a coordinated assault on hedge fund short positions in the United States boosted demand for safe-haven assets.

The greenback has benefited from safety buying since the start of the week, when investors fretted that President Joe Biden’s fiscal spending package will not be as large as the proposed $1.9 trillion.

At the same time, Covid-19 vaccine rollouts globally have been running into trouble. In Europe, production delays have snowballed into a spat between the European Union and drugmakers over how best to direct the limited supplies available.

“The caution in the market’s mind hasn’t gone away,” said Shusuke Yamada, a currency strategist at Bank of America in Tokyo. “The dollar and other haven currencies will see some demand for the time being.”

“The more medium-term question is what U.S. fiscal policy will do to U.S. interest rates, Fed policy, and therefore the U.S. dollar,” he added.

The dollar index gained 0.2% to 90.757 in the Asian day, bringing its weekly rise to 0.6%.

The greenback advanced 0.3% to 104.52 yen, another traditional safe-haven, adding to the previous day’s gains of about 0.2%.

The euro declined 0.2% to $1.20955.

The U.S. currency, as measured by the dollar index, has broadly rebounded since dipping to three-year lows at the start of this month on the view that last year’s decline ran too far too fast.

However, many analysts expect the greenback to return to the downward trend that saw it lose nearly 7% of its value last year as the new U.S. government implements massive fiscal spending while the Federal Reserve maintains its ultra-easy monetary policy.

“The overall trend does reflect these supply issues around the U.S. dollar,” said Michael McCarthy, chief strategist at CMC Markets in Sydney.

“Wide expectations of that huge issuance that’s coming and the support of the Fed mean that we’re looking in the medium-term for further U.S. dollar weakness.”

The dollar was stuck on the back foot against major peers on Wednesday as markets wait on comments from Federal Reserve Chair Jerome Powell, who is likely to renew a commitment to ultra-easy policy.

The greenback held declines against riskier currencies, with pandemic recovery hopes getting a boost as the International Monetary Fund upgraded its forecast for 2021 global growth.

Treasury yields, whose rise had supported the dollar at the start of this year, declined overnight amid caution about the eventual size of and potential delays to President Joe Biden’s $1.9 trillion fiscal stimulus plan.

“The stronger the world economic outlook, the weaker the U.S. dollar,” said Joseph Capurso, currency analyst at Commonwealth Bank of Australia in Sydney.

“Powell is going to make clear that they don’t see any near-term exit from their very easy policy stance, and that’s going to pull the dollar down.”

The Fed chair is due to speak at a news conference after the central bank’s two-day policy meeting that ends Wednesday.

Earlier this month, he said in a web symposium with Princeton University that the U.S. economy is still far from the Fed’s inflation and employment goals, and it is too early to discuss altering monthly bond purchases.

The dollar index ticked up 0.1% to 90.253 on Wednesday in Asia, following a 0.2% decline the previous session.

The gauge has been consolidating since bouncing off a nearly three-year low of 89.206 at the start of the month.

The British pound climbed to its highest since May 2018 at $1.3753 before trading slightly lower at $1.3724.

The Aussie dollar slipped 0.2% to 77.30 U.S. cents, paring Tuesday’s 0.5% rally.

Traders are also keenly watching progress on the U.S. stimulus front after Senate Majority Leader Chuck Schumer said Democrats may try to pass much of the President’s massive spending package with a majority vote, but it is not clear if they have the numbers to override Republican objections.

“We’ve had a lot of speculation recently that the Biden stimulus package won’t be negative for the dollar at all, in fact it will be a positive thing just on the basis that it should lead to U.S. economic outperformance,” said Kyle Rodda, a markets analyst at IG Markets.

“But I think if you look at more of the trends in the market at the moment, and we go back to the business cycle, we’re really only at the beginning of this uptick in the global recovery, and a necessary ingredient of that is a weaker dollar.”

The greenback gained 0.1% to 103.72 yen following a similar-sized decline overnight.

The euro was mostly flat at $1.2153 after rising around 0.1% in the previous session.