The dollar was hemmed into a narrow trading range on Friday as traders contemplate the next moves by major central banks ahead of a U.S. Federal Reserve meeting next week.
The euro nursed losses after European Central Bank President Christine Lagarde squashed expectations that policymakers will start to consider a tapering of bond purchases due to an improving economic outlook.
Fed Chairman Jerome Powell is likely to repeat Lagarde’s message that talk of tapering is premature, which would put downward pressure on Treasury yields and cap the dollar’s gains against most currencies.
The dollar stood at 107.90 yen, close to a seven-week low.
The euro bought $1.2017 after falling 0.2% on Thursday.
The British pound was quoted at $1.3842 following a 0.6% loss in the previous session.
The Fed’s next meeting ends on April 28, and while no major policy changes are expected, investors are paying close attention to any comments about the chance of scaling back monetary easing in the future.
Rising coronavirus vaccination rates and an improving economic outlook are reasons to be optimistic, but investors are scaling back expectations for a withdrawal of monetary easing after Lagarde said talk of phasing out emergency bond purchases is premature, analysts said.
Data on manufacturing and services activity in both the United States and Germany are due later on Friday, which could support positive economic sentiment, but the dollar and the euro are unlikely to move much as investors stick to the sidelines before the Fed’s meeting, analysts said.
· Expect further dollar weakness in the coming months, CIO says
Steve Brice from Standard Chartered Wealth Management goes through the possible scenarios that could define financial markets in 2021.
· U.S. CDC probes new death, hospitalisation after J&J vaccine shots - officials
· Hungary to widen services activity as vaccination rate nears 40%
· J&J COVID-19 vaccine expected to be imported to India by July - report
· COVID-19 spike is biggest challenge to India’s recovery-MPC minutes
A steep rise in COVID-19 infections across the country is the single biggest challenge to economic recovery, Reserve Bank of India Governor Shaktikanta Das wrote in his monetary policy committee (MPC) meeting minutes released on Thursday.
The MPC kept its key interest rate at a record low of 4% earlier this month and said monetary policy would remain accommodative until the prospects of a sustained recovery were well secured.
All six members highlighted the increased risks to economic recovery from the recent steep rise in coronavirus infections and said monetary policy must continue to support growth.
· India's capital has huge demand for oxygen as hospitals run short, minister says
· As India added to travel red-list, Britain finds 55 more cases of coronavirus variant
· UAE suspends all flights from India due to COVID-19 surge
· Singapore to block arrivals from India due to coronavirus wave
· Australia to cut flights from India to contain virus risk
· France to impose quarantine for travelers coming from five countries
French Interior Minister Gerald Darmanin said on Thursday a 10-day quarantine will be imposed starting from Saturday for travelers from Brazil, Chile, Argentina, South Africa and India.
· Japan approves rheumatoid drug Baricitinib for COVID-19 patients
· Japan PM Suga plans fresh emergency curbs amid surge in COVID cases
The Japanese government plans to declare a state of emergency for the third time for Tokyo and three other prefectures following a resurgence of new COVID-19 infections, Prime Minister Yoshihide Suga said on Thursday.
Suga told reporters the government will formally declare the state of emergency after a meeting with experts to be held on Friday, when asked when the decision will be made.
While Suga did not specify the length of the state of emergency, public broadcaster NHK said the government is considering imposing the curbs from April 25 to May 11.
· S.Korea widens public access to virus self-test kits amid surge
· Indonesia to restrict foreign travellers coming from India over coronavirus
· Australia man contracts COVID-19 after finishing two-week quarantine
A man in Australia tested positive for COVID-19 after finishing his hotel quarantine, authorities said on Friday, raising concerns about community transmission as more virulent virus strains emerge.
· Global economy to stage vigorous recovery; jobs growth to lag
The global economy will recover this year from its coronavirus slump at a pace not seen since the 1970s as strong momentum builds in most major economies, according to Reuters polls of over 500 economists.
That optimism was largely led by the widely expected vaccine-driven recovery, massive liquidity injections, unprecedented fiscal support - primarily by the United States, with more in the pipeline - and continued adaptation of economic activity to overcome subdued mobility.
But 2021 growth views for 55% of 44 economies polled on were upgraded from three months ago, led by the U.S. economy - which was predicted to mark the fastest annual expansion since 1984 - and China, set to return to pre-crisis levels this year.
The devastating pandemic pushed the world economy into its deepest-ever recession last year, but the poll showed a sharp rebound with the global economy predicted to grow on average 5.9% this year, the fastest since the 1970s.
· White House says Biden is finalizing details of American Family Plan
White House press secretary Jen Psaki said on Thursday that President Biden is continuing to meet with his policy team to finalize details of the American Family Plan, the next phase of his $4 trillion push to overhaul the American economy.
The president is expected to outline the plan before his first address to a joint session of Congress next week, Psaki said.
· Biden’s climate summit zeroes in on technology to help fight global warming
· UK Retail Sales Surge Before Lockdown Easing, Borrowing Leaps Too
British retail sales rocketed last month as consumers prepared for a partial lifting of coronavirus lockdown restrictions, according to official data which also showed record peacetime government borrowing.
Sales volumes leapt by 5.4% in March from February, the Office for National Statistics said, with clothing stores benefiting especially.
Economists polled by Reuters had expected a month-on-month increase of 1.5%.
· Euro zone business activity grows for the first time in 6 months
Business activity in the euro area expanded in March, according to preliminary figures on Wednesday, but economies are bracing for a third wave of Covid-19 infections which could derail any recovery.
IHS Markit’s flash composite PMI for the euro zone, which looks at activity across both manufacturing and services, hit 52.5 in March versus 48.1 in February. A reading above 50 represents an expansion in economic activity.
The preliminary data points to the first economic expansion in the region since September and the largest increase since July.
French activity improves
The latest business activity data for the country came in at a three-month high, though still in contraction territory. France’s flash composite output index stood at 49.5 in March, from 47.0 in February.
German manufacturing hits record level
Meanwhile, the German manufacturing sector keeps on delivering for Europe’s largest economy. Germany’s flash composite output index rose to 56.8 from 51.1 in February, representing a 37-month high.
The positive economic activity was supported by a record increase in manufacturing output, which reached 68.5 in March, a level not seen since April 1996.
· Japan factory output seen down again, retail sales up amid fragile recovery
Japan’s factory output likely fell for a second straight month in March, but retail sales were set for a solid rebound from the prior month’s decline, a Reuters poll showed on Friday, underscoring a fragile recovery from the coronavirus crisis.
· Japan PM's push for higher minimum wage faces uphill battle amid pandemic
Prime Minister Yoshihide Suga's plan to boost the minimum wage is facing stiff opposition from Japan's small and midsize firms, worried about their survival during COVID-19, and from lawmakers in his own ruling party amid concerns of a political backlash.
· China tells UK to 'right its wrong moves' after parliament's Xinjiang motion
China said on Friday that Britain should "immediately right its wrong moves" in response to the UK parliament's motion calling on its government to take action to end what the lawmakers described as genocide in China's Xinjiang region.
· China, North Korea poised to resume freight rail links as trade revives
· Senior Chinese diplomat hopes ASEAN summit helps with Myanmar ‘soft landing’
· Seven SE Asian leaders and Myanmar junta chief to attend crisis summit-sources
Seven Southeast Asian leaders are expected to attend a summit with head of Myanmar's junta to discuss the crisis caused by the military coup, according to diplomats and officials in Jakarta, the Indonesian capital where Saturday's meeting will be held. Thailand's prime minister and the president of the Philippines have said they would send their foreign ministers. ASEAN's other members include Myanmar itself, Brunei, Cambodia, the host Indonesia, Laos, Malaysia, Singapore and Vietnam.
· Desperate hunt for missing Indonesian submarine as oxygen set to run out
· Singapore’s Prime Minister Lee Hsien Loong has named a new finance minister, replacing Heng Swee Keat who announced two weeks ago that he will step aside as Lee’s designated successor.
· Oil edges higher on U.S., Europe demand hopes
Oil prices rose on Friday on hopes of a fuel demand recovery in the United States and Europe as economic growth picks up and lockdowns ease, but worries about India’s raging second wave of COVID-19 cases kept a lid on gains.
Brent crude futures rose 21 cents, or 0.3%, to $65.61 a barrel at 0137 GMT, after climbing 8 cents on Thursday.
U.S. West Texas Intermediate (WTI) crude futures jumped 29 cents, or 0.5%, to $61.72 a barrel, also after an 8 cent gain on Thursday.
U.S. refiner Valero said gasoline and diesel demand were back to 93% and 100% of the levels they were at before the pandemic, with chief commercial officer Gary Simmons saying the company is “pretty bullish on gasoline going forward”.
Improving conditions in Europe also buoyed sentiment. France said schools would reopen on Monday and domestic travel curbs in place since early April restricting people to within 10 km (6 miles) of their homes would end on May 3.
Reference: CNBC, Reuters
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