Dollar set as data for weekly losses, Fed cool bond market

© Reuters. FILE PHOTO: An employee counts US dollar bills at a money exchange office in central Cairo

By Tom Westbrook

SINGAPORE (Reuters) – The dollar faced its worst week of the year on Friday as unexpectedly strong economic data in Europe, weak US employment numbers and a determinedly accommodating Federal Reserve led investors to unwind some bets on the greenback.

The euro and yen are also facing their biggest weekly percentage gains in five months, while the value, which has fallen 1% this week, is parked near a two-week low at 92.066.

“In short, the energy disappeared from the dollar recovery in the first quarter, as well as from the bond sell-off,” said Kit Juckes, head of FX strategy at Societe Generale (OTC :).

At the start of the Asia session, the euro was above its 200-day moving average at $ 1.1916, just below Thursday’s two-week high of $ 1.1928, while the yen rose its 20-day moving average to $ 109.325 each Dollar broke through. The euro is up 1.4% against the dollar and the yen up 1.3% this week.

The euro is also up more than 2% against the pound this week. It rebounded from an annual low of 84.70p on Monday to 86.81p in Asia on Friday as concerns about Britain’s reliance on AstraZeneca (NASDAQ 🙂 vaccine increased. Sterling was an outlier against the dollar this week, down half a percent to $ 1.3744.

The vaccine, which was developed with Oxford University and is considered a pioneer in the global vaccination race, has been plagued by safety concerns and supply problems. Australia and the Philippines restricted use of the shot on Thursday while the African Union dropped plans to purchase the shot.

On the data front, the numbers showed overnight that unemployment claims rose unexpectedly in the US – a bit dampening after a payroll report was released last week. The price increase for European factory gates accelerated after surprisingly strong growth in business activity.

Fed leaders also vowed again to keep monetary policy super simple despite some early positive signals from economic data. Chairman Jerome Powell said policies won’t change until there is at least a month-long series of such dates, while board member James Bullard said the Fed shouldn’t even discuss changes until it is clear the pandemic is over.

Treasuries rose on job shaky and Fed comments, pushing the benchmark’s 10-year returns – which fall as prices soar – to a two-week low of 1.6170%. [US/]

This robbed the dollar of another part of its recent pull, while generally positive sentiment in equity markets also supported risk-sensitive Australian and New Zealand currencies, which have moved to the top in the latter two.

The last was at $ 0.7657, up 0.8% for the week, while that rose to $ 0.7060, up 0.6% over the week.

“The markets are rethinking their view of the US dollar state of emergency,” ANZ Bank analysts said in a note on Friday.

“Stronger US growth should benefit all global cyclical assets, including the New Zealand dollar and Asian currencies, and that appears to be the theme of the day.”

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