The greenback was rose roughly 0.3 percent to 111.77 yen, its strongest level since Dec. 20.
The dollar's advance gathered momentum after it successfully breached technical resistance near the 200-day moving average of 111.30.
The dollar index against a basket of six major currencies extended overnight gains and was up 0.1 percent at 96.250, pulled further away from a three-week trough of 95.824 plumbed on Thursday.
· "The dollar received a clean break as Treasury yields rose in earnest following the robust U.S. GDP data," said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.
"The strong response to the U.S. GDP data shows that the market is currently focused on fundamentals, rather than geopolitical factors."
· The euro was steady at $1.1371, having slid from a three-week peak of $1.1420 scaled the previous day.
The benchmark 10-year U.S. Treasury yield stood at 2.716 percent after surging to 2.731 percent on Thursday, its highest since Feb. 6.
· According to Karen Jones, analyst at Commerzbank, EUR/USD has started to approach its 6 month resistance line at 1.1457 and directly above here lies the 200 day ma at 1.1507.
Key Quotes
“It has not cleared the 100 day ma at 1.1387 yet but we look for it to remain underpinned by the 1.1216 November low. We continue to favour recovery. Above the 200 day ma will re-target the 1.1623 mid October high and slightly longer term we look for gains to 1.1685, the 55 week ma.”
“Long term trend (1-3 months): A rise above the recent high at 1.1623 would confirm a trend reversal and put the 55 week moving average at 1.1723 back on the cards.”
· US Core PCE Price Index: Thursday, 13:30. The Fed targets Core Price Expenditure Index, making the figure significant for markets despite the lagging publication. With stable Core CPI figures, no significant changes are projected to the y/y numbers. On a monthly basis, prices rose by 0.1% in November and may have risen by 0.2% in December. Note that this release may be canceled.
· President Donald Trump embarked on his trip to Vietnam with a political cloud hanging over his head and keen to show progress on a thorny foreign policy issue that has befuddled many of his predecessors.
While Trump’s much-hyped meeting with North Korea’s Kim Jong Un broke up in disagreement over sanctions linked to Pyongyang’s nuclear weapons program, testimony from his former lawyer Michael Cohen, who accused him of breaking the law while in office, represented a potentially damaging development for the president at home.
The conclusion among Trump’s inner circle was that the president came out of the week okay, feeling there was not much new in Cohen’s testimony and that Trump was getting credit for walking away from a potentially bad deal with the North Koreans.
But the Cohen testimony raised questions among Trump allies about his re-election campaign’s ability to organize a proper response.
· Weak demand in China and growing global fallout from the Sino-U.S. trade war took a heavier toll on factories across much of Asia in February, business surveys showed on Friday.
Activity in China’s vast manufacturing sector contracted for the third straight month, pointing to more strains on its major trading partners and raising questions over whether Beijing needs to do more to stabilize the slowing economy.
While there was a marginal pick-up in domestic orders in China, analysts said it was too early to tell if it was due to
“The upshot is that it is probably too soon to call the bottom of (China’s) current economic cycle,” Julian Evans-Pritchard, senior China economist at Capital Economics, wrote in a note after the survey. “Indeed, we expect growth to continue to come under pressure until the middle of this year.”
· Japan’s household spending likely fell in January as a warm winter weighed on sales of seasonal items, a Reuters poll showed on Friday, and amid broader concerns over the economy following a run of weak data.
Household spending likely slipped 0.4 percent in January from a year earlier, the poll of 16 economists showed, after it rose 0.1 percent in December.
Warm weather slowed consumer spending on energy related items and hampered sales of winter clothes for the month but solid winter bonus payments are likely to have helped private expenditure, analysts said.
· Oil prices climbed on Friday as markets tightened amid output cuts by producer club OPEC, but surging U.S. supply and concerns of global economic slowdown kept a lid on further gains.
International Brent crude futures were at $66.85 per barrel at 0750 GMT, up 54 cents, or 0.81 percent, from their last settlement.
U.S. West Texas Intermediate (WTI) crude oil futures were at $57.66 per barrel, up 44 cents, or 0.77 percent.
“Global (oil) markets appear tighter than many anticipated for this time of year, but scores of unsold barrels can pile up quickly and saturate regions,” Canada’s RBC Capital Markets said in a research note on oil markets.
· CRUDE OIL TECHNICAL ANALYSIS
Crude oil prices continue to hover above support guiding the uptrend from late December lows. A break below this barrier – now at 55.13 – sets the stage for a retest of the 50.15-51.33 area. Alternatively, a push above resistance in the 57.96-59.05 zone exposes trend line support-turned-resistance from February 2016, currently at 62.03.
Reference: Reuters, CNBC, Daily Fx, Fx Street, FX Crunch
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