• The dollar rose on Friday for its strongest week against a basket of currencies in nearly 15 months as some traders piled into the greenback in a week of tremendous swings felt in stock and bond markets around the world.
This week’s dramatic moves -- in equities with the Dow falling over 1,000 points on Thursday and in bonds with 10-year yield rising to a four-year peak earlier this week -- were stoked by concerns about signs of inflation amid an improving global backdrop and speculation whether the Federal Reserve and other major central banks would act quicker to raise interest rates.
Against a basket of six major currencies, the greenback was up 0.22 percent at 90.427. On the week, the dollar index gained 1.41 percent for its best week in almost 15 months.
The dollar also received support after Congress and U.S. President Donald Trump approved a federal budget plan that ended an overnight federal shutdown.
• The yen edged higher versus the dollar on Monday, but traded below a five-month high after a bounce in U.S. equities late last week dampened demand for traditional safe haven currencies.
The dollar eased 0.2 percent to 108.62 yen, but remained above Friday’s trough of 108.05 yen, the dollar’s lowest level since Sept. 11. The dollar fell nearly 1.3 percent against the yen last week.
• The euro held steady at $1.2258. Last week, the common currency slid 1.6 percent, its worst weekly performance since November 2016, as receding risk sentiment and higher volatility prompted market players to cut back their positions.
• The bond market also calmed from its wild moves earlier this week. Benchmark 10-year Treasury yields were 1.4 basis point lower on the day at 2.835 percent, which was below a four-year peak of 2.885 percent on Monday.
• A brief U.S. government shutdown ended on Friday after Congress passed and President Donald Trump signed into law a temporary spending deal expected to push budget deficits past $1trillion annually with new military and domestic outlays.
But Trump is expected to unveil on Monday a fiscal 2019 budget plan that will be based on rosy assumptions, including economic growth of 3.2 percent next year, a White House official said.
That level is well above the 2.5 percent growth achieved in 2017 and the 2.5 to 2.7 percent range of economists’ forecasts for this year. The White House’s plan also anticipates that the strong growth will go on for years, the official said, with 3 percent growth in 2021, only tapering to 2.8 percent in 2026.
• Sharp swings in global financial markets in the past few days are not worrying since economic growth is strong but reforms are still needed to avert future crises, the managing director of the International Monetary Fund said on Sunday.
• The Bank of England is likely to need to raise interest rates again to tackle inflation but will not do so aggressively, the central bank’s chief economist said in a newspaper article published on Sunday.
• Japan’s government has decided to nominate Haruhiko Kuroda as governor of the central bank for another term when his current one expires in April, a person briefed on the matter said on Saturday, a sign the country’s ultra-loose monetary policy will remain in place.
• Oil prices slid more than 3 percent on Friday as U.S. futures fell below $60 a barrel for the first time since December on renewed concerns about rising crude supplies.
U.S. and Brent crude futures have slid more than 11 percent from this year’s peak in late January. Brent fell nearly 9 percent for the week while U.S. crude dropped 10 percent, the steepest weekly declines since January 2016.
U.S. West Texas Intermediate (WTI) crude CLc1 settled down $1.95, or 3.2 percent, to $59.20, the lowest settlement since Dec. 22. The session low for U.S. crude was $58.07. More than 845,000 contracts changed hands in another above-average day for trading volumes.
Brent futures LCOc1 fell $2.02 a barrel, or 3.1 percent, to $62.79 a barrel, its lowest settlement since Dec. 13.
Reference: Reuters
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