· Dollar holds advantage on economic optimism, euro looks vulnerable
The dollar traded near multi-month highs against most major currencies on Friday, supported by a wave of optimism due to improving U.S. economic data, the rollout of coronavirus vaccines, and rising Treasury yields.
The euro was in focus ahead of data on German business sentiment due later in the day, but the outlook for the common European currency has soured due to renewed coronavirus lockdowns and the slow pace of vaccinations across the European Union.
The greenback has more room to rise against the euro, but its gains against other currencies in the past few weeks have been so rapid that some analysts are warning against chasing the dollar higher from current levels.
“The euro has broken through the 200-day moving average, and that is a clear sign that it will continue to go lower,” said Minori Uchida, head of global markets research at MUFG Bank in Tokyo.
“The yen is getting strong on some of the crosses, which will cap dollar/yen. Yields have supported the dollar, but this move could start to run out of steam.”
Against the euro, the dollar was quoted at $1.1776, close to its strongest since November last year.
The dollar bought 109.21 yen, which is near its highest since June.
One notable exception to the dollar’s gains was the British pound <GBP=D3>, which edged up to $1.3747 after rising 0.4% on Thursday. Data due later on Friday that is forecast to show a rebound in British retail sales could give the pound a further boost.
U.S. jobless claims fell to a one-year low last week and President Joe Biden said he will double his vaccination rollout plan after reaching his previous goal of 100 million shots 42 days ahead of schedule, both of which support optimism in the dollar.
The dollar index against a basket of six major currencies stood at 92.788, close to a four-month high.
Traders will look to data on U.S. personal consumption due later on Friday for further hints about the strength of the U.S. economy.
During European trading Germany’s Ifo survey is expected to show an improvement in business morale. But this is unlikely to halt the euro’s slide, because worries about the European Union’s slow vaccination rollout and bickering with former member Britain over vaccine exports have become a dominant theme, traders said.
The Australian and New Zealand dollars rebounded from sharp losses earlier in the week.
· Portugal extends COVID-19 emergency until mid-April
Portugal on Thursday extended a state of emergency for 15 days as its gradually eases strict lockdown measures imposed in mid-January to tackle what was then the world’s worst coronavirus surge.
The country started to relax the restrictions on March 15, reopening bookshops, kindergartens, pre-schools, primary schools and hair salons.
· Australia considers diverting COVID-19 vaccines to PNG as 'disaster' looms
Australia is considering diverting COVID-19 inoculations from its vaccination programme to Papua New Guinea (PNG) where the coronavirus is threatening to unleash a humanitarian disaster, a government source said on Friday.
PNG is due to get 588,000 doses of vaccine by June under the COVAX initiative to help poorer countries but doubts have arisen about those supplies given new restrictions imposed in producing countries as the virus spreads.
· South Korea extends coronavirus distancing curbs as daily case count hits month high
South Korea said on Friday it will extend its coronavirus distancing rules, which include an outside dining curfew and ban on gatherings of five or more people, for two weeks as its daily new cases hit a one-month high.
· Thailand urges calm after death of COVID-19 vaccine recipient
Thai health officials rushed to calm public fears on Friday after confirming a man had died 10 days after receiving a COVID-19 vaccine earlier this month.
· Friday preview: UK retail sales, US consumer confidence in focus
The market spotlight at the end of the week will be on UK retail sales volumes for February, which are expected to bounce back after crashing during the previous month.
Consensus is for a month-on-month increase of 2.1%, following an 8.2% drop in January, although economists at Barclays are anticipating a much larger 4.2% bounce.
Should Barclays' forecast prove correct, that would see the year-on-year rate of decline in retail sales volumes improve from -5.9% to -1.5%.
Stateside, investors will be trying to take stock of the ongoing rebound in activity as the Department of Commerce releases personal income and spending data for February.
Also due out is a final reading on the University of Michigan's consumer confidence index for March.
· China sanctions UK entities, individuals for Xinjiang 'lies'
China sanctioned organisations and individuals in the United Kingdom on Friday over what it called “lies and disinformation” about Xinjiang, days after Britain imposed sanctions for human rights abuses in the western Chinese region.
The Chinese foreign ministry said in a statement it sanctioned four entities and nine individuals, including lawmakers such as former Conservative Party leader Iain Duncan Smith and the Conservative Party Human Rights Commission, that “maliciously spread lies and disinformation.”
· Japan approves bill to oversee land deals near defence bases, border islands
Japan's cabinet approved on Friday a bill that will tighten oversight of land deals and land use near military facilities and border islands, reflecting Tokyo's concern about overseas security risks.
The government plans to submit a bill to parliament that requires planned purchases to be reported to the authorities when the land is deemed highly sensitive to national security. Deals in urban areas may be exempt if they affect economic activity, and the regulations will apply regardless of a buyer's nationality.
"I'm determined to pass the bill during the current session of parliament by any means," Japanese Prime Minister Yoshihide Suga told parliament this month.
· Canada calling? Hong Kong residents shift billions abroad after clampdown
As China imposed a sweeping national security law in Hong Kong last year after massive protests, residents of the city moved tens of billions of dollars across the globe to Canada, where thousands are hoping to forge a new future.
Capital flows out of Hong Kong banks reaching Canada rose to their highest levels on record last year, with about C$43.6 billion ($34.8 billion) in electronic funds transfers (EFT) recorded by FINTRAC, Canada's anti-money laundering agency, which receives reports on transfers above C$10,000.
· Suez Canal blockage is delaying an estimated $400 million an hour in goods
The stranded mega-container vessel, Ever Given in the Suez Canal, is holding up an estimated $400 million an hour in trade, based on the approximate value of goods that are moved through the Suez every day, according to shipping data and news company Lloyd’s List.
· Oil prices recover some ground on fears Suez blockage may last weeks
Oil prices reversed a sharp sell-off a day earlier to rise 1% on Friday on mounting fears that it could take weeks to dislodge a giant container ship blocking the Suez Canal, which would squeeze supplies of crude and refined products.
Prices, however, were still headed for a third consecutive weekly loss, with the outlook for demand dented by fresh coronavirus lockdowns in Europe.
Brent crude was higher by 54 cents, or 0.9%, at $62.49 a barrel by 0432 GMT, after dropping 3.8% on Thursday.
U.S. West Texas Intermediate (WTI) crude was up 65 cents, or 1.1%, at $59.21 a barrel, having tumbled 4.3% a day earlier.
Both benchmarks were on track for a weekly loss of about 3%, following a more than 6% decline last week.
Reference: CNBC, Reuters
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