· Dollar set for first winning week in three with eyes on Fed
The dollar headed for its first winning week in three on Friday after rebounding from a payrolls-induced sell-off, as investors continued to ponder the timing of a tapering of Federal Reserve stimulus.
The dollar index, which gauges the greenback against six major peers, slipped 0.07% to 92.469, but remained on course for a 0.4% weekly rise.
Data on Thursday showed that the number of Americans filing new claims for jobless benefits fell last week to the lowest level in nearly 18 months, offering more evidence that job growth was being hindered by labor shortages rather than cooling demand for workers.
“The Fed looks set to taper later this year, underscored by recent comments this week,” Mark McCormick, global head of FX strategy at TD Securities, wrote in a research note.
However, even with the trend toward monetary policy becoming less accomodative globally, financial conditions remain ultra-loose, which “binds how much room the USD has to run and favors selling rallies,” McCormick said.
support the USD gradually, especially when tapering actually starts,” strategists led by global head of FX research Paul Mackel wrote in a report, projecting the dollar to strengthen to $1.15 by year-end.
The euro ticked 0.07% higher to $1.18325 on Friday, on track for a 0.39% decline this week.
The dollar added 0.1% to 109.845 yen, and was poised to gain 0.15% this week, although the pair was still meandering in the middle of its range of the past two months.
· China's yuan touches 1-week high after Biden and Xi hold second phone call
Relations between Washington and Beijing have been at their lowest point in decades and it was only the second call between the leaders since Biden took office in January. The conversation focused on economic issues, climate change and COVID-19, a senior U.S. official said.
In the spot market, the onshore yuan opened at 6.4552 per dollar and was changing hands at 6.4472 at midday, 88 pips firmer than the previous late session close.
If the yuan finishes the late night session at the midday level, it would have gained 0.18% to the dollar for the week, booking the third straight winning week in a row.
The Aussie dollar rose 0.24% to $0.7385, tempering its loss for the week to a 0.85% decline, after drawing support from a rise in risk appetite after the White House said President Joe Biden spoke by phone with Chinese leader Xi Jinping in their first talks in seven months.
Reference: CNBC, Reuters
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