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·         Dollar gains, riskier currencies lose out as U.S. yields rise again

The dollar rose on Friday, recovering its losses from the day before, as a spike in Treasury yields early in the European session triggered a risk-off move in global currency markets, with riskier currencies taking a hit.

Market participants have grown wary in recent weeks that there could be a spike in inflation caused by massive fiscal stimulus and pent-up consumer demand when economies reopen from their coronavirus lockdowns.

Although soft U.S. CPI data on Wednesday went some way to calm those fears, U.S. Treasuries sold off again on Friday, with the 10-year yield rising above 1.6%.

The dollar was up 0.4% on the day at 0840 GMT, at 91.835. But it was still below the high of 92.506 it reached on Tuesday, which was its strongest since November 2020.

Dollar-yen was up around 0.6%, changing hands at 109.140 at 0842 GMT. That’s close to the peak of 109.235 reached on Tuesday, which had been the yen’s weakest since June 2020.

Elsewhere, bitcoin traded around $56,738 at 0838 GMT, having come close to, but not exceeded, its recent record high of $58,354.14.

 

·         GBP/USD off the lows, regains 1.3950 amid mixed UK data

GBP/USD has bounced-off lows and recaptures 1.3950 despite mixed UK economic data. The cable remains undermined by broad-based US dollar strength, as the Treasury yields rebound on relfation trade.

Technically, a two-week-old falling trend line guards the quote’s immediate upside around 1.4000. However, buyers are likely to remain hopeful unless witnessing a daily closing below the 50-day SMA level of 1.3787.

 

·         EUR/USD drops below 1.1950 as Treasury yields rebound

EUR/USD extends the drop below 1.1950, pausing a three-day winning streak, with prominent analysts raising their year-end target for the US 10-year yield. the Eurozone's slow vaccine delivery and coronavirus lockdowns could keep the EUR bulls at bay

While momentum on the four-hour chart remains to the upside, the pair slipped below the 50 Simple Moving Average on the four-hour chart – a bearish sign.

Support awaits at 1.1925, which capped the pair early in the week. It is then followed by 1.1895, a temporary cushion and finally by 1.1836, the 2021 trough.

Resistance awaits at 1.1990, the weekly high and also a support line seen early in March. It is followed by 1.2025 and 1.2050.

 

EUR/USD: Three fundamental downside drivers

- The European Central Bank sought to address this by accelerating its bond-buying program ‘significantly’ in the second quarter. However, the scope of the plan remains unchanged at €1.85 trillion. Moreover, this Pandemic Emergency Purchasing Program (PEPP) is still on course to expire in March 2022. Accompanied by confusing messages from ECB President Christine Lagarde, the euro remains vulnerable.

- Europe's sluggish growth forecasts are highly correlated with its slow vaccine rollout – and the situation has further worsened.

- Supplies are delayed once again, and in some countries, they have halted altogether due to concerns that the doses result in blood clots.

 

“Support awaits at 1.1925, which capped the pair early in the week. It is then followed by 1.1895. Resistance awaits at 1.1990, the weekly high and also a support line seen early in March. It is followed by 1.2025 and 1.2050.”

 

Bitcoin is changing hands below $57,000, off the weekly tops but not far from all-time highs. Ethereum is below $1,800 as the world watches Non-Fungible Tokens (NFTs). A digital artwork sold for nearly $70 million in an auction, using ETH.

 

·         Americans could receive third stimulus payments as early as this weekend

 

·         A year on, Europe faces slow Covid vaccine rollouts and fears of another wave

On the first anniversary of the public health crisis, there’s not much time in Europe to reflect on the losses of the past year — one in which the region has seen over 547,000 people die from the virus, and thousands lose their livelihoods.

France reported 30,303 new coronavirus infections over the past 24 hours on Wednesday, with the number of new cases rising above 30,000 for the first time in two weeks. Health experts say the hospital system in the greater Paris region is close to breaking point, Reuters reported.

Meanwhile, Hungary, the Czech Republic and Poland have all recorded a sharp rise in cases that has prompted urgency among governments in eastern Europe to increase the rate of vaccinations.

 

·         Los Angeles movie theaters could open next week to limited capacity

 

·         As vaccine nationalism deepens, governments pay to bring production home

 

·         ECB's Villeroy flags flexibility on bond purchases

 

·         UK economy shrinks by monthly 2.9% in January

Britain’s economy shrank by a less severe than expected 2.9% in January from December as the country went back into a coronavirus lockdown, official data showed on Friday.

Britain’s economy is likely to shrink by 4% in the first quarter of 2021, due mostly to the latest lockdown but also because of disruption caused by new, post-Brexit rules for trade with the European Union, the Bank of England said last month.

 

·         UK exports to EU slump in first month of new Brexit trade ties

Exports and imports from Britain to the European Union plunged during the first month of the country’s new trade relationship with the bloc, according to data published on Friday with some heavy caveats.

Exports of goods to the EU, excluding non-monetary gold and other precious metals, slumped by 40.7% in January, the Office for National Statistics said. Imports fell by 28.8%

·         IMF warns ‘unsustainable’ rise in New Zealand house prices could trigger a correction

 

·         Canada says AstraZeneca vaccine is safe after Norway and Denmark suspend use

 

·         China warns U.S. to stay out of Hong Kong affairs ahead of Alaska meet

China again warned the United States to stop interfering in its affairs, including Hong Kong, a foreign ministry spokesman said on Friday, ahead of talks between diplomats of both countries which Washington has said would be “difficult”.

 

·         In China strategy, Biden to meet with leaders of Australia, India, Japan

U.S. President Joe Biden will meet on Friday with the leaders of Australia, India and Japan, a group central to his efforts to counter China’s growing military and economic power.

 

·         China’s GDP growth target of over 6% is easy to reach – and that’s not a bad thing, analysts say

China’s target of more than 6% growth for 2021 is not very meaningful because it can be easily reached — but that’s not necessarily a bad thing, analysts told CNBC this week.

“It almost does the same thing as not having a growth target on there because it’s such an easy target to hit,” said Michael Hirson, Eurasia Group’s practice head for China and Northeast Asia.

Simon Baptist, chief economist at The Economist Intelligence Unit (EIU), echoed the same sentiment.

“It will easily be met,” he told CNBC’s “Street Signs Asia” on Thursday. “It’s sort of a target that you have when you don’t really want to have a target.”

 

·         Japan January machinery orders seen down for first time in four months - Reuters poll

Japan’s core machinery orders likely dropped in January from December’s level, a Reuters poll found on Friday, predicting the first monthly decline in four months as renewed emergency curbs to slow the spread of COVID-19 hurt business investment.

Regarded as an indicator of capital spending for the next six to nine months, core machinery orders likely fell 5.5% in January from December, the poll of 19 economists found.

Core orders, which excludes orders from shipbuilders and electric utilities, were forecast to have slipped 0.2% in January from the same month a year ago.

The economy is widely viewed to be shrinking in the current quarter as the anti-virus restrictions have hurt consumer spending and firms, especially in the service sector.

The government will release core orders data at 8:50 a.m. Japan time on Monday (2350 GMT on Sunday ).

Trade data is set to be released on Wednesday.

The poll showed exports in February were expected to have decreased 0.8% from year-ago levels. It would be the first decline in three months, but that was partly due to Lunar New Year holidays falling in February this year, having fallen in January last year.

Imports are forecast to have grown 11.9% in February from a year earlier, resulting in a trade surplus of 420 billion yen ($3.86 billion).

Consumer price index (CPI) data, due to be released next Friday, is expected to show a 0.4% fall in February, compared with a 0.6% fall in January.

 

·         U.N. expert: Myanmar junta likely committing crimes against humanity

The top United Nations official on human rights in Myanmar said the military junta was likely committing crimes against humanity as the death toll rose to more than 70 on Thursday amid an escalating crackdown by security forces on protesters.

 

·         Brent crude eases, but stays near $70 as demand optimism lends support

Brent crude prices eased on Friday but hovered near $70 a barrel as production cuts by major oil producers constrained supply, with optimism about a recovery in demand for the resource in the second half of the year also lending support.

Brent crude futures for May slipped 33 cents, or 0.5%, to $69.30 a barrel by 0749 GMT while U.S. West Texas Intermediate crude for April was at $65.65 a barrel, down 37 cents, or 0.6%.

After seven straight weeks of gains, front-month Brent could close this week little changed as investors took profit after prices touched a 13-month high on Monday following attacks on Saudi Arabian oil facilities.

Sentiment was also buoyed by the decision of the Organization of Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, earlier this month to largely hold production cuts in April.

Investors have been pumping funds into commodities such as oil on expectations of a demand recovery in the second half of the year as the global economy grows, while a wider rollout of vaccines against the COVID-19 pandemic allows more people to travel this summer.

 

Reference: CNBC, Reuters, FXStreet