The dollar edged lower on Monday amid speculation that U.S. Federal Reserve Chairman Jerome Powell will shun talk of tapering bond purchases at a policy meeting this week.
The euro rose to a near two-month high against the greenback before data later on Monday forecast to show an improvement in German business sentiment, which would bolster hopes for a brighter economic outlook.
Powell is likely to face questions over whether an improving labour market and rising coronavirus vaccinations warrant a withdrawal of monetary easing, but most analysts expect him to say such talk is premature, which would put downward pressure on Treasury yields and the dollar.
The dollar stood at 107.75 yen, close to its lowest since March 4.
The euro rose to $1.2110, adding to gains made on Friday after positive data on European services and manufacturing activity.
A survey from Germany’s Ifo institute due later on Monday is expected to show business conditions continued to improve in Europe’s largest economy.
The British pound was quoted at $1.3897, adding to a 0.3% gain in the previous session.
The Fed’s next meeting ends on Wednesday, and while no major policy changes are expected, investors will pay close attention to Powell’s comments after the meeting.
Rising coronavirus vaccination rates and an improving economic outlook are reasons to be optimistic, but many traders and analysts say Powell is likely to reiterate his commitment to keep easy policy in place for an extended period.
U.S. funds have been selling the dollar against the yen recently in Asian trading, which is an additional sign that major investors expect lower U.S. Treasury yields to push the dollar lower, some traders in Tokyo said.
In emerging markets, traders are watching the Turkish lira to see if it will test its all-time low of 8.58 per dollar due to worsening relations with the United States and worries about a dovish central bank governor. The lira was last quoted at 8.4285.
The onshore yuan edged up to 6.4866 per dollar, just shy of a six-week high.
Elsewhere, the Australian and New Zealand dollars rose toward one-month highs but are likely to track moves in global commodity prices, traders said.
In the cryptocurrency market, Bitcoin reclaimed the $50,000 mark and smaller rival Ether rose, recouping some of their losses from last week triggered by U.S. President Joe Biden’s plan to raise capital gains taxes for wealthy investors.
· USD to extend its bearish trend unless Fed delivers hawkish surprise – MUFG
· 10-year Treasury yields will break out of slump within weeks, - to end the year between 2.10% and 2.40%. Wells Fargo predicts
· 'Hopeful trend' as COVID-19 dip, but U.S. vaccine gaps remain -CDC's Walensky
U.S. COVID-19 cases fell 10% over the past week, signaling a "hopeful trend" even as wide gaps in vaccination rates across the country have raised new concerns, the head of the U.S. Centers for Disease and Prevention said on Friday.
· Half of British population has had first COVID-19 vaccine
· European Union will let vaccinated Americans visit this summer - official
European Union countries agreed this month to launch COVID-19 travel passes that would permit people who have been vaccinated against the disease, recovered from an infection or have tested negative to travel more easily.
· Germany could be in lockdown until June with Covid cases rising
· J&J vaccine study to resume in South Africa on Wednesday, ministry says
A research study in South Africa further evaluating Johnson & Johnson's (JNJ.N) COVID-19 vaccine in the field will resume on Wednesday, the health ministry said, after the study was paused over rare cases of blood clots in people given the vaccine.
· Israel examining heart inflammation cases in people who received Pfizer COVID shot
Pfizer said it has not observed a higher rate of the condition than would normally be expected in the general population.
· India's coronavirus crisis deepens as countries promise aid
India's new coronavirus infections hit a record peak for a fifth day on Monday as countries including Britain, Germany and the United States pledged to send urgent medical aid to help battle the crisis overwhelming its hospitals.
Infections in the last 24 hours rose to 352,991, with overcrowded hospitals in Delhi and elsewhere turning away patients after running out of supplies of medical oxygen and beds.
· France to send oxygen equipment to India to help with COVID crisis
· Thailand suspends travel from India as it steps up coronavirus measures at home
· Hong Kong, Singapore to start long-delayed travel bubble next month
A long delayed travel bubble between Hong Kong and Singapore will begin on May 26, the two cities said on Monday, as they moved to re-establish overseas travel links and lift the hurdle of quarantine for visiting foreigners.
· BoE Deputy Governor Broadbent forecasts consecutive quarters of rapid growth -Telegraph
Bank of England Deputy Governor Ben Broadbent has forecast consecutive quarters of rapid growth but also warned that inflation will prove less predictable, according to an interview with the Telegraph newspaper.
It may be too soon to call a "roaring twenties" scenario, but it certainly means "very rapid growth at least over the next couple of quarters" particularly as the economy will be boosted by people simply saving less, Broadbent said in remarks published Saturday evening in the Telegraph newspaper.
· UAE could stay on the UK’s travel ‘red list’ indefinitely, and mixed messages are stoking confusion
· German IFO Expectations Index drop to 99.5 in April vs. 101.3 expected, EUR/USD stays below 1.21
The headline German IFO Business Climate Index came in a tad higher at 96.8 in April versus last month's 96.6, missing the consensus estimates of 97.8.
Meanwhile, the Current Economic Assessment arrived at 94.1 points in the reported month as compared to last month's 93.1 and 94.4 anticipated.
The IFO Expectations Index – indicating firms’ projections for the next six months, fell to 99.5 in April from the previous month’s 100.3 reading and better than the market expectations of 101.3.
Market reaction
EUR/USD keeps its range below 1.2100 on downbeat German IFO data, struggling to extend the upbeat momentum ahead of the US data.
The spot was last seen trading at 1.2094, down 0.06% on a daily basis.
· EU blames China for endangering peace in South China Sea
The European Union called out China on Saturday for endangering peace in the South China Sea and urged all parties to abide by a 2016 tribunal ruling which rejected most of China’s claim to sovereignty in the sea, but which Beijing has rejected.
The EU last week released a new policy aimed at stepping up its influence in the Indo-Pacific region to counter China’s rising power.
The Philippines on Friday protested to China over its failure to withdraw what it called as “threatening” boats believed to be manned by maritime militia around the disputed Whitsun Reef, which Manila calls the Julian Felipe Reef.
· Australia defence minister says conflict with China over Taiwan 'should not be discounted'
Conflict with China over Taiwan "should not be discounted," but Australia will work with its allies in the region to try and maintain peace, Australian Defence Minister Peter Dutton said on Sunday.
· India: 1Q GDP to fall on seasonally adjusted sequential basis – Morgan Stanley
ndia’s economy is seen contracting on a seasonally adjusted sequential basis in the quarter ending June, as the local covid restrictions are likely to extend for a few more week, Morgan Stanley’s India economist, Upasana Chachra, said in her latest note.
“Expect India’s this FY growth at 11.5%, continues to expect the first lift in policy repo rate in the quarter ending December.”
· Philips lifts 2021 forecast as first-quarter sales soar amid pandemic
Philips on Monday posted a hefty jump in quarterly profit and nudged its expectations for 2021 higher as the coronavirus pandemic drives demand for its hospital equipment and personal health appliances.
The Dutch health technology company said core earnings surged 74% in the first quarter to 362 million euros ($438 million) on a 9% rise in comparable sales, easily beating analysts’ expectations.
· Myanmar activists call for new non-cooperation campaign
Activists opposed to Myanmar's junta called on Monday for people to stop paying electricity bills and agricultural loans, and keep their children away from school, scorning the top general's pledge at a regional summit to end the post-coup crisis.
· California governor seeks end to oil drilling in state by 2045
· Oil falls 1% as India's COVID-19 surge dents demand outlook
Oil prices fell more than 1% on Monday on fears that surging COVID-19 cases in India will dent fuel demand in the world's third-biggest oil importer and as investors adjusted positions ahead of a planned increase in OPEC+ output from May.
Brent crude fell 72 cents, or 1.1%, to $65.39 a barrel by 0653 GMT, following a 1.1% rise on Friday. U.S. West Texas Intermediate (WTI) crude futures were down 67 cents, or 1.1%, at $61.47 a barrel, after rising 1.2% on Friday.
Both benchmark crudes fell about 1% last week.
Thai
Eng