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After a strong 2018, analysts expect the dollar to come under pressure in coming months with diminishing prospects for U.S. central bank rate hikes in2019, which has driven Treasury yields lower.

The yield on U.S. 10-year treasuries fell to 2.63 percent, the lowest in nearly a year on Wednesday.

·       Federal Reserve chairman Jerome Powell speaks in Atlanta on Jan. 4. Any acknowledgement that growth risks are building and financial conditions are tightening is likely to be read by traders as a dovish policy signal.

Elsewhere, sterling fell 0.49 percent to $1.2545 on Thursday.

·       The euro was higher at $1.1364 in Asian trade. On Wednesday, the single currency fell 1 percent after data showed manufacturing activity contracted in Spain, France, Italy, and Germany.

·       The Australian dollar, often considered a gauge of global risk appetite, fell to its lowest level since 2009 in early Asian trade to an intra-day low of$0.6776.

It last traded at $0.6943, down 0.59 percent. Weaker-than-expected data out of China, Australia’s largest trade partner has taken the shine off the Aussie dollar in recent weeks.

Analysts think the outlook for the Aussie dollar can improve if there is significant progress in U.S.-Sino trade talks which are scheduled to take place later this month.

·       Charging the risk averse mood was a rare revenue warning from Apple Inc, which added to worries about fading global demand.

Apple cut its sales forecast for its latest quarter, citing slowing iPhone sales in China. That followed a series of surveys that showed factory activity weakening across much of Europe and Asia in December.Market participants fled to the safety of the highly liquid Japanese yen, which rose 1.4 percent versus the dollar on Thursday, fetching 107.26.

In early Asian trade, the dollar tumbled to an intra-day low of 104.96 yen, its lowest since March 2018 before recovering some of its losses as trading progressed.

Longer-term, however, analysts see other reasons for the yen to rise.

·       U.S. President Donald Trump said on Wednesday he had received a “great” letter from North Korean leader Kim Jong Un and would probably meet him again in the not-too-distant future as part of efforts to persuade him to give up his nuclear weapons.

In their first action in control of the U.S. House of Representatives, Democrats plan to adopt a bill on Thursday to end a federal shutdown without funding a Mexican border wall, trying to firmly fasten blame for the 13-day-old closure on President Donald Trump and his Republicans.

But Senate Majority Leader Mitch McConnell said on Wednesday his chamber, still in Republican hands, would not vote on the legislation, calling it a “political sideshow” and “total nonstarter.”

·       The biggest story for investors on Thursday was Apple Chief Executive Tim Cook’s letter to investors, in which he lowered the tech giant’s first-quarter revenue guidance to $84 billion, down from the $89 billion to $93 billion that had previously been forecast. The firm also lowered gross margin expectations to approximately 38 percent, down from a previously projected 38-38.5 percent.

Apple blamed a number of factors for the climbdown in guidance, including weakness in China’s economy and disappointing iPhone revenue. The news amplified fears of a downturn in global growth, as well as the effects of U.S.-Sino trade tensions on corporate earnings.

·       Apple CEO Tim Cook told CNBC on Wednesday that he believed the ongoing trade tensions between the U.S. and China “put additional pressure” on Asia’s largest economy.

Hours after the publication of those comments, China’s overall tech sector fell slightly and shares of some Apple suppliers dove during Thursday’s mid-morning Asian trading.

China’s tech-heavy Chinext composite traded down by 0.487 percent and the Shenzhen composite and Shenzhen component saw losses of 0.454 percent and 0.447 percent, respectively. Because of their composition, the Shenzhen indexes are closely watched as indicators of Chinese tech shares.

·       Former Brexit minister David Davis said in an opinion essay published on Wednesday that UK Prime Minister Theresa May should delay the vote on her Brexit deal for leaving the European Union.

“The more we prepare to leave the EU without a deal, the more likely a good deal becomes,” Davis said in an opinion piece in the Telegraph newspaper. He wrote that the EU is worried about losing the 39 billion pounds divorce payment that would come with a Brexit deal.

·       German Economy Minister Peter Altmaier said in an interview published Thursday that the U.K.’s withdrawal from the European Union poses an economic risk, although he added that he expected growth in Germany to continue.

According to a survey released by U.K. industry body the British Chambers of Commerce on Thursday, the percentage of services firms reporting a rise in domestic sales fell to the lowest level in two years in the fourth quarter.

·       Oil prices fell on Thursday amid volatile currency and stock markets, and as analysts warned of an economic slowdown for 2019 just as crude supply is rising globally.

U.S. West Texas Intermediate (WTI) crude oil futures dropped by around 2 percent from their last settlement, or 93 cents, to $45.61 by 0404 GMT.

International Brent crude futures were down 1.1 percent, or 60 cents, at $54.31 a barrel.

 

Reference: Reuters, CNBC