The yen stood within reach of a 17-month high against the dollar early on Friday, with the Federal Reserve's cautious stance towards hiking interest rates continuing to take a toll on the U.S. currency.
The dollar traded little changed at 111.28 yen JPY= after sliding to 110.67 overnight, its lowest since October 2014. The greenback was dragged lower as Treasury yields slid after the Fed lowered its expectations for interest rate increases this year.
The euro hovered near a five-week high of $1.1342 EUR=. The dollar index .DXY moved in the opposite direction and stood near a five-month trough of 94.650 plumbed overnight.
Firms responding to the Manufacturing Business Outlook Survey reported an improvement in business conditions this month. The indicator for general activity rose sharply in March to its first positive reading in seven months. Other broad indicators offered similar signals of growth: The indexes for shipments and new orders also rose notably. Firms continued to report overall weak employment. With respect to the manufacturers’ forecasts, the survey’s future indicators also showed significant improvement this month.
The number of Americans filing for unemployment benefits rose from a five-month low last week, but remained below a level associated with a strengthening labor market as the economy regains momentum after a slow fourth quarter.
In addition, job openings hit a six-month high in January and a gauge of future economic activity increased in February after two straight months of declines.
"The labor market is tight as a drum. If we continue to receive strong reports like this, then the Fed is going to have to put a June rate hike on the table," said Chris Rupkey, chief economist at MUFG Union Bank in New York.
Switzerland’s central bank left interest rates unchanged at record lows, cut its economic outlook and forecast a longer bout of deflation as cheaper oil and slowing global growth weigh on the economy.
The Swiss National Bank kept its target range for three-month Libor in negative territory, between -1.25 and -0.25 per cent, in Thursday’s quarterly policy assessment, as economists polled by Reuters unanimously predicted. It also maintained a charge on cash deposits of 0.75 per cent and repeated its pledge to intervene in the currency market if necessary to weaken the “significantly overvalued” Swiss franc.
BoE leaves main interest rate on hold. At its meeting ending on 16 March...the MPC voted unanimously to maintain Bank Rate at 0.5 per cent,” the Bank of England said in published minutes. The BoE also maintained the amount of cash stimulus, or quantitative easing (QE), pumping around the British economy at £375 billion ($540 billion, 478 billion euros).
SOUTH AFRICA RAISES BENCHMARK RATE TO 7.00% FROM 6.75%, by MKS News
U.S. oil futures flirted with new highs for 2016 on Friday, adding to strong gains the previous session as optimism grew that major producers would strike a deal to freeze output, while a more benign interest rate environment also supported prices.
U.S. crude CLc1 was down 5 cents at $40.15 a barrel at 0031 GMT (8.31 p.m. EDT), after rising as far as $40.55 - its highest so far this year.
On Thursday, the contracted rose 4.5 percent to close at $40.20, after climbing as high as $40.26.
Brent crude's front-month contract LCOc1 was down 18 cents at $41.36. It finished up $1.21 at $41.54 a barrel on Thursday, after earlier reaching the year's peak of $41.60, a level that was matched earlier on Friday.
Crude oil prices were solidly higher and hit a 2.5-month high Thursday, on reports major world oil producers from OPEC and Russia will meet on April 17 to discuss production limits. The up-trending crude oil market and slumping U.S. dollar index are bullish for the raw commodity sector, and do further suggest the “bust cycle” in the sector has ended.
Reference: Phil.frb, Reuters, Kitco, MKS, Gulf Today
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