Dollar descent

Jens Nærvig Pedersen Danske Bank A/S

Market movers today

In Sweden, we get the almost new activity indicator (SCB's monthly GDP proxy) for May alongside household consumption, also for May. Both are likely to show some stabilisation after the collapse in April.

In the US, the initial jobless claims data will be scrutinised by markets. Atlanta Fed President Raphael Bostic is also set to speak this afternoon.

Selected market news

A number of Fed speakers Wednesday and overnight raised the issue of potential economic risks from the second wave of infections and the need for further policy action. Cleveland Fed President Loretta Mester did not want to rush into forward guidance, but argued for, at a later stage, connecting future policy moves towards Fed's inflation and unemployment objectives. Atlanta Fed President Raphael Bostic called for potentially more action on monetary or fiscal policy. He also raised a potential pitfall from the policy of yield curve control, which is the need for an orderly exit strategy. Boston Fed President Eric Rosengreen argued for extending the main street lending programme.

UK Chancellor of the Exchequer announced a GBP30bn stimulus package on Wednesday, which includes tax cuts for home-buyers and the hospitality industry and vouchers on eating out in August.

EIA's weekly report on the US oil market showed a 5.6mb rise in US crude stocks, which was higher than expected. However, gasoline demand continues to recover and crude production was unchanged at 11mb/d. Hence, it does not seem as if the oil market has been hit by the latest resurgence in infections in some states in the US. Brent has traded steadily around the USD43/bbl level this week.

The USD took a broad-based dive yesterday, which continued overnight. It was particularly visible in EUR/USD. The pair moved firmly above the 1.13 level and close to the peak from early June. The move was hard to square with the development in rates and stock markets. We forecast EUR/USD to climb further to 1.15 in 3M.

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Author

Jens Nærvig Pedersen

Danske Bank A/S

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.