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·         The dollar gained against a basket of currencies on Thursday on higher U.S. bond yields and expectations of more rate increases from the Federal Reserve, while sterling fell to a near two-week low on perceived dovish remarks from the head of the Bank of England.

An index that tracks the greenback versus the euro, yen, sterling and three other currencies .DXY rose 0.28 percent, to 89.877 after touching a one-week peak.

This has propelled the two-year Treasury yield US2YT=RR to 2.436 percent, its highest level since September 2008.

The euro EUR= was last down 0.21 percent, at $1.2346, while the dollar JPY= was 0.10 percent higher at 107.34 yen.

·         Recent economic data suggested business activities overseas may have peaked. This has reduced the appeal of the euro, yen, pound and other currencies which have strengthened against the dollar since 2017 based on the view economies outside the United States had been faring better until recent weeks.

·         The relatively optimistic backdrop in the United States should support the Fed to raise short-term rates at least twice more in 2018, traders and analysts said.

·         Bank of England Governor Mark Carney on Thursday dampened widespread expectations for an interest rate hike in May, pointing out there were also “other meetings” this year, and acknowledged the recent mixed domestic economic readings, which reinforced the view the BOE would raise rates gradual over next few years. His comments knocked the pound to near two-week low against the dollar GBP=D3.

Sterling was last down 0.85 percent at $1.4085.

·         The Federal Reserve should continue raising interest rates this year and next to keep the economy from overheating and financial stability risks from rising, a U.S. central banker said on Thursday.

Cleveland Fed President Loretta Mester, who votes on policy this year and leans towards being hawkish, said the central bank can speed or slow its “gradual” policy tightening if inflation unexpectedly spikes or if trade or geopolitical tensions, which she currently sees as risks to her outlook, worsen.

·         The current economic environment remains favorable, but short-term risks to global financial stability have increased in the past six months, as a result of a spike in stock-market volatility in February and continuing investor concerns about rising geopolitical and trade tensions. Looking ahead, the odds of a downturn remain elevated, and there’s even a small chance of a global economic contraction over the medium-term.

IMF Managing Director Christine Lagarde told reporters a U.S.-China trade war "will not be something that will affect only the two countries because the world is so interconnected. It will affect the global economy."

For now, the IMF expects the global economy to grow 3.9 percent this year, the fastest since 2011. But Lagarde says "we are seeing more clouds accumulating on the horizon." She cited trade tensions and rising global debts, which have hit a record $164 trillion. She noted that government debt in advanced economies is at the highest level since World War II.

Global debt hit its highest levels ever and governments should take actions to reduce their indebtedness while the going is still good, the International Monetary Fund said.

·         Bank of Japan Governor Haruhiko Kuroda said the rising tide of protectionism is emerging as a more imminent risk to Japan’s economy, issuing his strongest warning to date of the damage trade frictions could inflict on an otherwise solid recovery.

·         German economic growth could slow slightly in the first quarter, but the upswing in Europe’s largest economy remains robust and broad-based thanks to strong domestic and foreign demand, the finance ministry said on Friday.

·         The euro zone and International Monetary Fund are discussing options for future debt relief for Greece at meetings this week in Washington, but are not considering any extensions of the Greek bailout, top euro zone officials said on Thursday.

·         The European Union said on Thursday it could impose further sanctions on Venezuela if it believes democracy is being undermined there, after the South American country’s president called for elections next month that the main opposition has said it will boycott.

·         White House national security adviser John Bolton told Russia’s ambassador on Thursday that better relations between the two countries required addressing U.S. concerns on election meddling, a chemical attack in Britain, and the situations in Ukraine and Syria, the White House said.

·         The United States has credible information that Russia and Syria are trying to “sanitize” the site of a suspected chemical weapons attack in Syria while denying access to the area by international inspectors, the State Department said on Thursday.

Department spokeswoman Heather Nauert said the team of inspectors from the Organisation for the Prohibition of Chemical Weapons (OPCW) had not been given access to the site of the alleged attack in the town of Douma on April 7.

“We have credible information that indicates that Russian officials are working with the Syrian regime to deny and to delay these inspectors from gaining access to Douma,” Nauert told a news briefing.

·         The Syrian government stepped up its efforts on Thursday to retake the opposition’s last besieged enclaves, as rebels prepared to withdraw from one and a newspaper reported an ultimatum against another.

·         President Bashar al-Assad scored a major victory this month by retaking eastern Ghouta, the biggest rebel stronghold near Damascus, putting his forces in by far their strongest position since the early months of the seven-year-old civil war.

The United States, Britain and France launched a volley of air strikes on Saturday against three Syrian targets in retaliation for a suspected chemical weapons strike during the Ghouta assault.

·         U.S. State Department officials did not accompany CIA Director Mike Pompeo to Pyongyang for a meeting with North Korea leader Kim Jong Un over the Easter weekend, a spokeswoman said on Thursday.

·         South Korean President Moon Jae-in said he saw no difference with North Korea on key concepts such as denuclearization, but cautioned that implementing any deal with Kim Jong Un would be difficult.

North Korea has expressed its desire for “complete denuclearisation” of the Korean peninsula and is not seeking conditions such as U.S. troops withdrawing from the South first, South Korean President Moon Jae-in said on Thursday.

·         The leader of the U.S. Senate Judiciary Committee said on Thursday the committee would vote on a bill to protect Robert Mueller, the special counsel appointed to investigate Russian meddling in the 2016 U.S. election, despite objections by the chamber’s Republican leadership.

·         The United States said on Thursday it had concerns about Turkey’s ability to hold free and fair elections given the ongoing state of emergency, a day after Turkish President Tayyip Erdogan called for a snap vote on June 24.

·         The United States and a group of other nations have agreed to boost cooperation to deny “corrupt” Venezuelan officials and their support networks access to the international financial system, U.S. Treasury Secretary Steven Mnuchin said on Thursday.

·         Iran warned the United States on Thursday of “unpleasant” consequences if Washington pulls out of a multinational nuclear deal, Iranian state TV reported.

“Iran has several options if the United States leaves the nuclear deal. Tehran’s reaction to America’s withdrawal of the deal will be unpleasant,” TV quoted Iranian Foreign Minister Mohammad Javad Zarif as saying on his arrival in New York.

·         Oil prices on Thursday hit highs not seen since 2014, built on the ongoing drawdowns in global supply and as Saudi Arabia looks to push prices higher, though U.S. crude gave back gains in the afternoon to finish lower.

U.S. West Texas Intermediate (WTI) crude futures CLc1 settled 18 cents lower at $68.29 a barrel after earlier hitting $69.56, their highest since Nov. 28, 2014. WTI has gained nearly 8 percent in the last eight days of trading.

Brent crude futures LCOc1 ended at $73.78 a barrel, up 30 cents. The global benchmark touched $74.75 a barrel, its highest since Nov. 27, 2014 - the day OPEC decided to pump as much as it could to defend market share.

Reference: Reuters, CNBC, Bloomberg, IMF BLOG