Dollar ends higher as the safe-haven yen tumbles

Market Review - 20/02/2020  23:35GMT  

Dollar ends higher as the safe-haven yen tumbles

The greenback continued its recent ascent and ended the day higher across the board on Thursday due to the selloff in the Japanese yen, hitting a near 10-month low versus the dollar in New York due to local coronavirus concern as well as economic fear that the country may already be in recession after recent data.  
  
Versus the Japanese yen, although dollar retreated to 111.12 at Asian open following Wednesday's rally to 111.58, the pair found renewed buying and gained to 112.18 in Europe on active selling in jpy as the coronavirus outbreak increased in Japan. The pair then ratcheted higher to a fresh near 10-month high at 112.22 in New York morning before retreating to 111.71 on profit-taking.  
  
Although the single currency recovered to 1.0815 at Asian open, renewed selling emerged and knocked price down to a fresh near 3-year low at 1.0778 at European open on usd's strength before rising to session highs at 1.0820 in New York morning but only to weaken again to 1.0784 near New York closing.  
  
The British pound met renewed selling at 1.2928 at Asian open and fell to 1.2884 in European morning on buying in usd and despite rebounding to 1.2925 on upbeat UK retail sales data, price dropped to a near 3-month low at 1.2849 at New York open on continued concern over EU-UK trade talks before recovering to 1.2888 in New York before stabilising.  
  
Reuters reported British shoppers started spending again at the start of this year after a very sluggish end to 2019, adding to signs that improved sentiment since December's election is translating into stronger economic activity.    Retail sales volumes rose 0.9% on the month in January on a seasonally adjusted basis, after a 0.5% fall in December, Britain's Office for National Statistics said on Thursday.    
This was the biggest rise since March and a stronger turnaround than the 0.7% month-on-month growth predicted on average by economists in a Reuters poll.  The bounce back was even more marked if fuel sales are excluded, with sales up 1.6% on the month, the biggest increase since May 2018 and above all forecasts in the Reuters poll.       
Annual sales growth remains lacklustre, however, up just 0.8% on the year after 0.9% annual growth in December, broadly in line with economists' forecasts.   
Excluding fuel, sales did not grow at all over the period from August to December, the weakest such run since comparable records began in 1996.   
  
In other news, Reuters then reported the U.S. economy is showing no signs of losing steam, U.S Federal Reserve Vice Chair Richard Clarida said on Wednesday, in an upbeat assessment of the outlook.    "The fundamentals in the U.S. are strong: sustained growth, strongest labor market in 50 years, price stability with inflation close to our goal," Clarida said in an interview with CNBC. "It's a good picture."   
  
On the data front, Reuters reported euro zone consumer confidence rose by 1.5 points in February from the January number, figures released on Thursday showed.    The European Commission said a flash estimate showed euro zone consumer morale improved to -6.6 this month from -8.1 in January.   conomists polled by Reuters had expected a fall to -8.2.    In the European Union as a whole, consumer sentiment rose by 1.2 points to -5.9.   
  
Data to be released on Friday :  
  
Australia manufacturing PMI, services PMI, Japan national core CPI, national CPI, Jibun Bank manufacturing PMI, total industry activity index.

France Markit manufacturing PMI, Markit services PMI, Germany Markit manufacturing PMI, Markit services PMI, Italy industrial orders, industrial sales, consumer prices index, CPI (EU norm), Swiss investor sentiment, EU Markit manufacturing PMI, Markit services PMI, HICP, UK Markit manufacturing PMI, Markit services PMI, PSNB, PSNCR.

Canada retail sales, retail sales ex-autos, and U.S. Markit manufacturing PMI, Markit services PMI, existing home sales.