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Dented by jobs miss, dollar teeters ahead of CPI

Brazil short-term FX rally obscured by reform worries: Reuters poll By Reuters

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© Reuters. FILE PHOTO: Brazilian Real and U.S. dollar notes are pictured at a currency exchange office in Rio de Janeiro, Brazil, in this September 10, 2015 photo illustration. REUTERS/Ricardo Moraes/File Photo

By Gabriel Burin

BUENOS AIRES (Reuters) – Brazil’s real will likely stay buoyant in the coming weeks but the currency’s medium-term prospects are still obscured by investor worries about the pace of reforms as lawmakers focus instead on the fight against COVID-19, a Reuters poll showed.

Amid a health crisis that has cost the lives of more than 465,000 Brazilians, the real has appreciated 15.6% from near-record low levels in March, benefiting from an economic recovery and steep interest rate hikes.

However, the currency remains liable to concerns over the ability or will of politicians to tackle long-standing inefficiencies as pandemic relief and social spending become the center of debate before the 2022 presidential vote.

Brazil’s lower house speaker said last week Congress was not in a position to rush through tax reforms, as that has been so long in the making that it was worth taking a few months more to get it right.

Despite improvements in Brazil’s trade and investment flows, “we see the lack of progress on structural (especially fiscal) reforms as a barrier to a more significant and lasting strengthening of the BRL,” Santander (MC:) analysts wrote in a report.

“Further reductions in the level of uncertainty regarding the Brazilian fiscal outlook would hinge on structural reforms that we believe will be increasingly hard to move in Congress, especially in a more polarized political environment.”

In an unusual result, the real is forecast to weaken rather than strengthen in one year, according to the median estimate of 20 respondents polled May 28-June 3, losing 2.7% to 5.22 per U.S. dollar from its value on Wednesday.

Reaffirming the currency’s softer outlook, Itau analysts said “for 2022, the global scenario of stimulus withdrawal, higher interest rates, and a stronger dollar tends to put pressure on the BRL and other emerging market currencies.”

Mexico’s peso was expected to keep doing well compared to its Latin American neighbors. The currency would end 2021 at around 20.0 per dollar, logging its fourth year in the same range without counting last year’s big drop.

“In light of the global uncertainty and given the Mexican agenda, with the mid-term elections likely to add more short-term volatility in the coming days, we suggest buying dollars in dips for trading purposes,” Banorte analysts wrote in a report.

(For other stories from the June Reuters foreign exchange poll:)

 

(Reporting and polling by Gabriel Burin in Buenos Aires; Additional polling by Tushar Goenka and Hari Kishan in Bengaluru; Editing by Bernadette Baum)

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



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Dollar Edges Higher; Focus Turns to May CPI Release

Dollar Edges Higher; Focus Turns to May CPI Release By Investing.com

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By Peter Nurse

Investing.com — The dollar traded marginally higher early in Europe Monday after the softer-than-expected payrolls release, with traders turning their attention towards this week’s inflation figures. 

At 2:55 AM ET (0755 GMT), the , which tracks the greenback against a basket of six other currencies, was up less than 0.1% at 90.180, remaining in a narrow range it has kept for several weeks.

traded less than 0.1% lower at 1.2163, but still above the three-week low of 1.2104 it had struck on Friday, while edged higher to 109.50. fell 0.1% to 1.4140 and the risk-sensitive was marginally lower at 0.7734.

Friday’s U.S. release showed an increase of 559,000 last month after a revised 278,000 gain in April, a touch below the 650,000 expected. 

While this still indicates a robust recovery in the U.S. labor market, the fact that the number missed expectations is likely to cool the pressure on the Federal Reserve to rein in its ultra-easy monetary policies, providing the central bank an excuse to defer the tapering debate a little longer.

Attention will now switch to the second component of the Fed’s dual mandate, with Thursday’s one of the last major pieces of economic data ahead of the next Fed meeting on June 15-16.

Expectations are running high that inflation will continue to press higher, with the May CPI number expected to climb to 4.7% on the year, a further leap higher from April’s 4.2% shock.

“The fate of EURUSD will depend a whole lot on how the Fed reacts to the summer of inflation as it could easily undermine the USD if the Fed allows USD real rates to plummet even further,” said analysts at Nordea, in a note.

The is also scheduled to meet on Thursday to decide whether to adjust the pace of its bond buying program, while also releasing its updated growth forecasts for 2021 and 2022.

“While the Governing Council remains divided, the majority is likely to support a decision to continue buying bonds at close to the current pace, as the recovery is not yet on a solid footing,” Nordea added.

Elsewhere, rose 0.1% to 6.4006, after the release of China’s May trade data. This showed Chinese growing at their fastest pace in a decade, boosted by the recent surge in commodity prices, but growth was lower than expected in the same month.

Over the weekend, U.S. Trade Representative Katherine Tai said that the between the two largest economies in the world has “significant imbalance” and the Biden administration is committed to leveling it.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



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Japan

Japan

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© Reuters. FILE PHOTO: A Japan Yen note is seen in this illustration photo taken June 1, 2017. REUTERS/Thomas White/Illustration

By Kevin Buckland and Hideyuki Sano

TOKYO (Reuters) -The developed world’s most dovish central bank and companies keen to put cash to work overseas have combined to make Japan’s yen one of the world’s worst performers this year, and that weakness could linger a while.

Factors at home and abroad have conspired to drive a 6% slide in the yen against the U.S. dollar this year.

Unlike other major central banks that are starting to face inflation risks and contemplating a withdrawal of emergency pandemic stimulus, the Bank of Japan has not only been grappling with deflation but has been notably loath to publicly suggest any tapering.

Japan has also been slower than most countries in getting its population vaccinated for COVID-19 and returning to normalcy. Its economy is shrinking and the absence of foreign tourists could mean no real boost from the delayed Tokyo 2020 Olympics this summer.

“I think the yen is going to be the one that really struggles as the global economy picks up,” said Joseph Capurso, head of international economics at Commonwealth Bank of Australia (OTC:).

While a recovery could undermine the dollar, which traditionally moves counter to economic cycles, the yen has even stronger safe-haven credentials and is likely to underperform, he said, projecting the yen at 116 in a year’s time compared with the current 110.

Indeed, as investors bet on economic recoveries in Europe and the United States, buoying global equities and bond yields as well as the dollar, the yen’s status as a cheap and safe funding currency has been reinforced.

“The carry trade is very much in vogue right now, and that doesn’t bode well for yen,” said Bart Wakabayashi, Tokyo branch manager of State Street (NYSE:) Bank and Trust.

“I don’t know what the story would really be to strengthen the yen right now.”

In late March, as 10-year U.S. Treasury yields — which the Japanese currency has a close, inverse relation to — hit one-year highs above 1.77%, the yen hit a one-year low of 110.97 per dollar.

But even after U.S. yields retreated below 1.6% as the Federal Reserve pushed back against speculation for an early taper of its asset-purchase programme, the yen didn’t budge much.

Some of that weakness can be explained by a sudden burst of overseas acquisitions by cash-rich Japanese companies.

Data from mergers and acquisitions (M&A) advisory firm Recof show there were 210 foreign acquisitions by Japanese companies during the first four months of 2021 worth 3.71 trillion yen ($33.64 billion), triple the total value a year earlier.

“Interest rates are one important factor influencing FX rates, but not the only factor,” said Citigroup (NYSE:)’s Tokyo-based chief currency strategist Osamu Takashima. “M&A-related flows are pushing the yen down against the dollar.”

HOW CHEAP?

The yen’s divergence from U.S. yields, and its persistent weakness through April even as the dollar fell broadly, has market participants disagreeing on its outlook.

“The divergence in monetary policy can explain some degree of yen weakness, but not this level,” said Tohru Sasaki, JPMorgan (NYSE:)’s Tokyo-based head of Japan market research. Sasaki says the one-time nature of the M&A outflows combined with the yen’s dislocation from fundamentals should argue for a recovery to 105 or 106 levels.

On a trade-weighted basis, the nominal yen index has lost 6.2% so far this year to a level last seen in 2018. A large part of that is on account of a surge in the , which comprises a third of the basket, more than the U.S. and European currencies combined.

“The yen looks both stuck and cheap,” Societe Generale (OTC:)’s global head of FX strategy, Kit Juckes, said in a research note, adding it was “waiting only for some better news on Covid and economic reopening to spread its wings.”

Meanwhile, hedge funds and other speculators have been piling on bets against the yen. Data from the U.S. Commodity Futures Trading Commission shows a steep climb to the biggest net short yen position in almost two years in late April.

For others, such as Bank of America (NYSE:)’s head of Japan FX and rates strategy, Shusuke Yamada, the possibility that the Fed signals some form of monetary tightening and the continued rise in equities imply more yen weakness. Yamada reckons the yen could go as far as 115 per dollar, and end the year at 113.

“BOJ will be the laggard, and probably the biggest laggard, so I think that’s in investors’ minds,” he said.

($1 = 110.2800 yen)

 



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Dollar Up, But Gentle Pressure Remains Ahead of “Super Thursday”

Dollar Up, But Gentle Pressure Remains Ahead of “Super Thursday” By Investing.com

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© Reuters.

By Gina Lee

Investing.com – The dollar was up on Monday morning in Asia. However, a softer-than-expected U.S. employment report for May put the greenback under gentle pressure as the week opens.

The that tracks the greenback against a basket of other currencies inched up 0.06% to 90.185 by 10:54 PM ET (2:54 AM GMT).

The pair inched up 0.08% to 109.57.

The pair inched down 0.03% to 0.7735 and the pair edged down 0.11% to 0.7023.

The pair edged up 0.11% to 6.4017. The yuan staged a comeback to again trade stronger than 6.4 per dollar and last bought 6.3880 offshore. that is due later in the day on the fundamental forces behind the yuan’s recent rapid rise.

The pair inched down 0.09% to 1.4142.

rose by 559,000 in May according to Friday’s U.S. employment report, below the 650,000 in forecasts prepared by Investing.com but above April’s 278,000 reading.

May’s was at a better-than-expected 5.8%, and the data helped calm worries about an earlier-than-expected asset tapering by the U.S. Federal Reserve for now.

“Friday’s slightly softer-than-expected U.S. May employment numbers stand to set the tone for the weeks ahead… this provides the excuse for the (Fed) to say that substantial progress towards its goals has not been achieved and to defer the tapering debate a little longer,” ING Bank analysts said in a note.

The worries had pushed a small increase in short bets against the dollar during the past week, even as Fed officials maintained that the economic recovery from COVID-19 still has a long way to go and that they expected to maintain their current dovish policy.

Investors’ focus is now on the figures due later in the week. The figures could influence the Fed’s next move as it further gauges current price pressures. A lower-than-expected figure could mean further declines for the U.S. currency.

Investors also await the European Central Bank (ECB)’s latest policy decision, due to be handed down on Thursday, with the Fed’s own June meeting scheduled for Jun. 15 to 16.

The focus will be squarely on whether the ECB will begin tapering its bond-buying program.

“Assuming dollar bears can pass through Super Thursday of U.S. CPI and the ECB policy decision unscathed, the dollar could stay gently offered into the major event risk of the month which is the FOMC decision,” the ING note added.

“The ECB is in a bit of a catch-22… the outlook is gradually improving and the financial conditions are also still broadly conducive to the recovery,” Rabobank analysts said in their own note.

However, this is partly due to resolute dovishness from several members, setting the stage for debate inside the meeting that could deliver a small slowdown in the pace of bond buying, the note added.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



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China aims to slow yuan

China aims to slow yuan

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© Reuters. FILE PHOTO: Chinese Yuan banknotes are seen in this illustration taken February 10, 2020. REUTERS/Dado Ruvic/Illustration//File Photo

By Kevin Yao

BEIJING (Reuters) – China is likely to lean on incremental steps to slow the yuan’s gains to deter speculators and help its exporters, shunning drastic measures that could undermine its goal to liberalise the currency and boost the yuan’s global clout, policy sources said.

The yuan has gained almost 12% against the dollar since May 2020 as China leads other economies in its recovery from COVID-19 and the greenback weakens, though it has been driven more recently by foreign fund inflows into yuan-denominated bonds and stocks.

But it slipped more than 0.5% this week as Beijing has mounted a coordinated effort to talk down expectations of further gains. A flurry of official statements have warned against speculating on the currency and regulators have taken steps to stem its rise.[CNY/]

The People’s Bank of China (PBOC) has ample tools to cool one-way currency bets and fend off hot money inflows amid worries over asset bubbles, but will tread cautiously to avoid spooking investors, said the policy sources, who advise the government.

The PBOC, under reform-minded governor Yi Gang, has been trying to give market forces a greater role in steering the yuan, part of longer-term reforms to make it a more international currency, they said.

“The yuan’s appreciation will test the PBOC’s market-based approach, but policy tools at the PBOC’s hands will be enough to cope with it,” said one of the people, who declined to be identified due to the sensitivity of the matter.

In a statement responding to questions from Reuters, the PBOC said it will not “use the exchange rate as a tool”, and reiterated its managed floating currency regime based on market supply and demand and with reference to a basket of currencies.

“The attitude of the PBOC on the exchange rate goal is consistent and clear, that is, no one can accurately predict the trend of the exchange rate, the uncertainty of the exchange rate is inevitable, and two-way fluctuations are normal,” it said.

Policymakers fear rapid yuan gains could lure more speculative money into everything from property, to stocks and commodities, fuelling asset bubbles, with any sudden reversal of the inflows potentially harming the economy.

They also worry about the impact on Chinese exports, which remain strong for now but could lose steam in the second half of the year as factories in other countries recover from the pandemic.

“We cannot allow one-way yuan appreciation. Otherwise there will be a vicious cycle as more capital inflows drive appreciation, and more appreciation boosts inflows,” Xu Hongcai, deputy director of the economic policy commission at the China Association of Policy Science, told Reuters this week.

“Eventually, this could lead to domestic inflation and asset bubbles and affect domestic monetary policy. Too much appreciation will be unfavorable for financial stability and unfavourable for exports.”

BULLISH BETS

The yuan is hovering near a three-year high against the dollar, and has recouped pretty much all its losses since the start of the Sino-U.S. trade war in early 2018. It is also near its strongest level versus a basket of trading partners since 2016.

Bullish bets on the yuan have hit a near six-month high, a Reuters poll showed this week, despite the spate of warnings from Chinese authorities.

The PBOC said in the statement that it has been fully communicating with the public on the currency issue and cautioned against any speculation.

To curb the yuan’s rally, the PBOC this week directed financial institutions to hold more foreign exchange in reserve. China’s foreign exchange regulator also granted fresh quotas of roughly $10 billion for outbound investment.

The PBOC is poised to take a measured approach, tightening conditions for some inflows, adjusting currency market liquidity and using its so-called window guidance to direct banks, the policy sources said.

The PBOC bank has repeatedly said it has “exited” from regular yuan intervention, but it continues to set a daily guidance midpoint and Chinese state banks were seen buying dollars last week.

Some policy insiders expect the yuan to rise further to 6.3 per dollar this year, from around 6.4 now, but caution that its outlook remains unclear as an expected policy shift by the U.S. Federal Reserve could spark capital outflows from China.

“The yuan could rise some more in the near term, but it could start to depreciate if the United States exits from its stimulus,” said one of the sources.

While China’s economy has rebounded to pre-pandemic levels, expanding a record 18.3% in the first quarter, its recovery remains uneven. Rising raw material costs are weighing on production and stirring worries about inflation.

The government has taken steps to slow soaring commodity prices but with limited success, fuelling speculation it may have to use a firmer yuan to offset imported price rises.

But central bank officials have recently stressed that the yuan would be not used as a tool to spur exports via depreciation or offset the impact of surging global commodity prices via appreciation.

 

 



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Dented by jobs miss, dollar teeters ahead of CPI

Dented by jobs miss, dollar teeters ahead of CPI By Reuters

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By Tom Westbrook

SINGAPORE (Reuters) – The U.S. dollar began the week under gentle pressure, after a second consecutive month of softer-than-expected U.S. jobs data reversed its recent attempts at a rally, as focus shifted to inflation figures and a European Central Bank meeting.

Friday jobs readout, which showed U.S. non-farm payrolls increasing by 559,000 in May, missed market expectations by nearly 90,000 and seemed to cool worries that the recovery was running hot enough to require early tapering of policy support.

After the data, the dollar unwound a broad bounce, and on Monday it opened in Asia near where it finished the week. A euro bought $1.2165, about 0.5% below the three-week high of $1.2104 it had struck on Friday.

The Australian and New Zealand dollars were back above 77 cents and 72 cents, respectively, and the dollar was back beneath 110 Japanese yen, last trading at 109.61 yen. [AUD/]

bounced back to again trade stronger than 6.4 per dollar and last bought 6.3880 offshore.

“Friday’s slightly softer-than-expected U.S. May employment numbers stand to set the tone for the weeks ahead,” ING Bank analysts said in a note to clients.

“This provides the excuse for the (U.S. Federal Reserve) to say that substantial progress towards its goals has not been achieved and to defer the tapering debate a little longer.”

Short bets against the dollar increased a tiny bit last week as Fed officials insist the recovery has a long way to run and they will not rush to react to short-term data points.

Still, U.S. inflation figures due on Thursday will be a major focus for traders looking to glean an insight into just how short-term growing price pressures may be. Another miss of lofty forecasts might clear the way for further dollar declines.

“Assuming dollar bears can pass through Super Thursday of U.S. CPI and the ECB policy decision unscathed, the dollar could stay gently offered into the major event risk of the month which is the FOMC decision,” ING analysts added in their note.

The , which measures the greenback against a basket of six major currencies, was steady at 90.107 in Asia, in the top half of a narrow range it has kept for several weeks.

Also this week is Chinese trade balance data, which could give a reading on the fundamental forces behind the yuan’s rapid rise, while the market’s focus for the ECB is on whether the bank adjusts the pace of its bond buying programme.

“The ECB is in a bit of a Catch-22,” said Rabobank’s macro strategists in a client note. “The outlook is gradually improving and the financial conditions are also still broadly conducive to the recovery,” they said.

However, this is partly due to resolute dovishness from several members, setting the stage for debate inside this week’s meeting which may deliver a small slowdown in the pace of bond buying, Rabobank added.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



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ECB Seen Pushing Ahead With Faster Bond Buying Until September By Bloomberg

ECB Seen Pushing Ahead With Faster Bond Buying Until September By Bloomberg

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(Bloomberg) — The European Central Bank will extend its phase of faster bond-buying through the summer to ensure the economic rebound after coronavirus lockdowns morphs into a sustained recovery, according to a Bloomberg survey of economists.

The majority expects the ECB to keep purchasing about 20 billion euros ($24.4 billion) worth of debt a week until September before slowing down. Most expect the 1.85 trillion-euro pandemic program to finish in March 2022, as currently planned.

The central bank accelerated purchases in March to keep financing conditions for companies, households and governments across the euro area favorable. Ahead of their June 10 meeting, policy makers have pushed back against the idea that they’ll pull back on buying as governments ease curbs on public life.

With growing price pressures around the globe, investors are closely watching for signs that central banks are ready to moderate the flood of liquidity they unleashed during the pandemic. Inflation in the euro area accelerated to 2% last month, technically above the ECB’s goal, though most economists and officials have said it’s a temporary phenomenon that will fade before long.

What Bloomberg Economics Says…

“This seems to be no time for the hawks to bicker about more bond buying. Bloomberg Economics expects policy makers to opt for another three months of ‘significantly higher’ purchases through the Pandemic Emergency Purchase Program.”

–David Powell, Maeva Cousin. Read the full report here.

President Christine Lagarde “will stress that the negative effects of the pandemic on the economy and hence inflation are still significant,” said Joerg Angele, an economist at Bantleon Bank. “However, regarding communication, this ECB meeting will be one of the most tricky ones in the past quarters.”

One complicating factor is that bond purchases are typically lower in the summer when market liquidity thins – a trend that could send the wrong signal to investors. Another is that the economic outlook is looking brighter, making it difficult to avoid a debate about a policy shift for much longer.

“The ECB can use the fact that we are heading into the quieter summer months to justify a slightly slower pace,” said Bas van Geffen, an economist at Rabobank. “That said, it may still be a bit of a hard sell to the market, requiring e.g. dovish rhetoric on medium-term inflation, even though the short-term economic outlook is improving.”

Europe’s vaccination campaign has picked up significantly after early stumbles, allowing governments to gradually ease restrictions on restaurants, travel and other activities. Recent economic indicators have signaled that the economy is starting to turn the page on the pandemic.

Three-quarters of economists surveyed expect the new forecasts presented at the meeting to show faster growth this year. The vast majority also said inflation projections for 2021 and 2022 will be revised upward.

“Fortunately for the ECB, the meeting comes early enough to still point to doubts and risks to the economic outlook, hence justifying a stance of ‘it’s too early to withdraw any kind of stimulus,’” said Carsten Brzeski, an economist at ING. “This stance will be very hard to maintain after the summer.”

Nearly half of the respondents expects the ECB won’t use up the full amount of the pandemic program. At the same time, one third expect an older purchase program that’s currently running at 20 billion euros a month to be expanded to provide continued support.

Another focus of the meeting is the ECB’s review of its strategy. Economists in the survey expect the results to be unveiled in September. Nearly eight out of ten said the central bank’s revised approach will include a “symmetric” inflation target, meaning policy makers will react equally to too-low and too-high results.

A majority also said policy makers will settle on a 2% inflation target — as opposed to the current “below, but close to, 2%” — and a closer focus on climate change.

©2021 Bloomberg L.P.



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Dollar Down as Investors Digest the Curbing of Yuan, Await Key U.S. Economic Data

Dollar Gains After Strong Economic Data; Payrolls Loom Large By Investing.com

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© Reuters.

By Peter Nurse

Investing.com – The dollar climbed in early European trade Friday, reaching multi-week highs after a spate of strong economic data ahead of the monthly payrolls release raised the possibility of early Federal Reserve tightening.

At 2:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was up 0.1% at 90.605, reaching a new three-week high.

traded 0.1% lower at 1.2113, also a three-week low, while edged lower to 110.26. fell 0.1% to 1.4095, sharply below the three-year high of 1.4250 reached Tuesday, and the risk-sensitive was down 0.1% at 0.7653, after falling to its lowest since mid-April overnight.

The dollar has been under pressure for much of 2021 as traders have reacted to ultra-easy Fed policies, and the suggestions that these would stay in place for some time. However, this narrative is starting to change as the U.S. economic rebound gains in strength, throwing up the possibility of it driving policy tightening.

Thursday saw the release of some strong economic numbers – increased by 978,000 in May, way above forecasts of 650,000; weekly fell below 400,000 for the first time since the start of the pandemic; and the rose to 64 last month, the highest on record, from 62.7 in April.

Even with these numbers detailing the obvious improvement in the U.S. economy, New York Fed President John Williams (NYSE:) still said Thursday that now is not the time for the central bank to adjust its bond-buying program, although he added that it makes sense for the policy makers to be talking through options for the future.

The next focus of the market will come later in the day when U.S. data is published at 8:30 AM ET (1230 GMT).

“The U.S. jobs report will provide an essential temperature check, not only on the health of the U.S. economy but also on supply-led inflationary pressures,” said analysts at investment management firm Brooks Macdonald. 

The expectation, according to Investing.com, is for about 650,000 jobs to have been added in May, although that number may well have started climbing after Thursday’s releases. 

That said, traders are wary of getting too confident about a strong number after April’s figure, which came in at 266,000 versus 978,000 expected.

“Of course, while the focus will be on May’s numbers, Friday’s data release also gives the opportunity to revise that April figure,” Brooks Macdonald added.

Elsewhere, rose 0.2% to 8.7102, with the lira weakening once more after Thursday’s surprise drop in inflation likely increased the pressure on Governor Sahap Kavcioglu to bow to President Recep Tayyip Erdogan’s vocal desire for lower interest rates. 

increased an annual 16.6% in May, down from 17.1% the previous month, and below the expected acceleration to 17.3%.

 



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Dollar in Narrow Range as Fed Officials Continue to Downplay Inflation Fears

Dollar Up Over Upbeat U.S. Employment Data, but Taper Concerns Remain By Investing.com

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© Reuters.

By Gina Lee

Investing.com – The dollar was up on Friday morning in Asia, posting its biggest gains in around a month. Investors continue to focus on the ongoing economic recovery from COVID-19 following positive U.S. employment data released on Thursday, as well as the possibility of a tapering of stimulus policy.

The that tracks the greenback against a basket of other currencies inched up 0.08% to 90.575 by 1:08 AM ET (5:08 AM GMT).

The pair inched down 0.01% to 110.27 after data released earlier in the day said household spending increased 0.1% and 13% in April.

The pair inched down 0.01% to 0.7657. in Australia increased 4.3% month-on-month, compared to 3.3% growth during the previous session, according to data released earlier in the day. Across the Tasman Sea, the pair inched up 0.08% to 0.7149.

The pair inched up 0.02% to 6.6049.

The pair inched down 0.09% to 1.4091 as investors await the U.K.’s in May, due later in the day.

U.S. fell to 385,000 in the previous week, released on Thursday. The number of claims recorded a fifth consecutive week of falls to a record low since the start of the COVID-19 pandemic in 2020.

Investors now await May’s data, due later in the day. Forecasts by Investing.com expected growth of 650,000 jobs in May.

“Clearly traders are covering dollar shorts into the jobs data,” said Chris Weston, head of research at brokerage Pepperstone, told Reuters.

“Between 250,000 to 500,000 jobs and we’ll potentially see the dollar/yen pair fall 0.6% to 0.8%,” Weston said. “A number in line will not give us much to work with, so the moves in the market will be dictated by the broad quality of factors, revisions to the April print of 266,000, the unemployment rate, hourly earnings,” he added.

Positioning data shows investors are heavily short dollars, with the market hypersensitive to any indication of a change in direction for the greenback or interest rate hikes. That could lead to a bumpy ride for the options market.

Brian Daingerfield, head of G10 currency strategy at Natwest, told Reuters that a payrolls print around 550,000 as the “goldilocks” number, “strong enough to keep the recovery going but not strong enough to pull tapering fears forward.” That could weaken the dollar broadly, offsetting Thursday’s gains, he added.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



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Musk tweet dents bitcoin, but weekly gain in prospect By Reuters

Musk tweet dents bitcoin, but weekly gain in prospect By Reuters

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© Reuters. FILE PHOTO: A representation of virtual currency Bitcoin is seen in front of a stock graph in this illustration taken January 8, 2021. REUTERS/Dado Ruvic

SINGAPORE (Reuters) – slipped more than 3% on Friday after Tesla (NASDAQ:) boss Elon Musk fired off a tweet hinting at a breakup with the cryptocurrency, though it remains on course for its best weekly gain in about a month as it tries to recover from May’s crash.

Bitcoin was last down about 3.6% at $37,809. Musk tweeted “#Bitcoin” and a heartbreak emoji above a meme appearing to show a couple discussing their breakup. Bitcoin is up 6.3% this week.

Musk has been a major promoter of cryptocurrencies but has turned critical of bitcoin since suspending Tesla plans to take it in payment for cars owing to concerns about its energy use.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



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