Schedule dollar index at intervals of 4 hours
The dollar rallied marginally on Friday, but could post its weakest week of the year as strong data from Europe, unexpectedly weak US jobs data and a decidedly soft Federal Reserve prompted investors to cut rates on the strength of the US currency.
The euro and yen are also poised for their biggest weekly percentage gains in four and five months, respectively, while the dollar index, which has dropped 0.9% this week, is near a two-week low of 92.171.
“In short, the energy from the dollar rebound in the first quarter went away, as did the bond sell-off,” said Keith Jukes, head of currency strategy at Societe Generale.
In the Asian session, the euro fell 0.1%, but held above its 200-day moving average at $ 1.1900, while the yen broke the 20-day moving average and held at 109.32 per dollar. Both currencies are up 1.3% against the dollar this week.
The euro is also up more than 2% against the pound this week, bouncing from an annual low of 84.70p on Monday to 86.81p, its highest level since February, amid growing concerns over UK dependence on the AstraZeneca vaccine. … The pound sterling fell sharply against the dollar this week, shedding 0.7% to hit $ 1.3723.
The vaccine, developed at Oxford University and considered to be the leader in the global vaccination race, suffers from safety and supply issues. Australia and the Philippines have restricted its use, the African Union has scrapped plans to buy it, and Hong Kong has postponed it.
The Australian and New Zealand dollars are hovering in the upper half of a range that has held them for about two weeks.
Slightly cautious sentiment in equity markets and a warning from Australia’s central bank of excessive credit risk weakened the Australian dollar, which fell about 0.4% to $ 0.7623, up 0.4% over the week. The kiwi fell 0.3% to $ 0.7036 and rose 0.3% on the week.
The pause in the dollar rally follows a solid rebound that has become its most powerful since 2017. Rising Treasury yields and growing consensus that the US economy could lift the world out of the pandemic lifted the dollar index 3.6% last quarter – the best quarter in nearly three years.
However, after a series of strong data, data on Thursday showed that US jobless claims rose unexpectedly.
Fed speakers also promised again that monetary policy will be very soft. Chairman Jerome Powell said policy won’t change until there is at least a long series of good data, while board member James Bullard said the Fed isn’t even going to discuss the change until it’s clear. that the pandemic is over.
Davis Hall, head of capital markets at Indosuez Asia, said the coming weeks and months are facing a tough test as markets and the Fed grapple with higher inflation results and possibly a faster recovery in Europe.
Meanwhile, growth in industrial prices in Europe accelerated following an unexpectedly strong growth in business activity.
“We are very skeptical that the dollar rebound will be sustained,” Hall said by telephone from Hong Kong.
“The dollar / yen could move higher, and the dollar / Swiss could rise due to the difference in interest rates, but if the growth in the US is strong, there is no certainty that it will benefit the dollar, provided that Europe can improve vaccination rates – this is key”.
“We are allowing the dollar to rise, but we are going to use this rebound to diversify and get away from dollar risks, and we like Asian currencies.”