Dollar ends higher on improved risk appetite

Market Review - 09/08/2019  00:00GMT  

Dollar ends higher on improved risk appetite

The greenback ended slightly higher against majority of its peers on Thursday on improved risk sentiment due to rising U.S. yields and stocks.  
  
Versus the Japanese yen, although the greenback gained to session highs at 106.30 in Asian morning on PBOC higher yuan-fixing at 7.0039, price erased its gains and dropped to 105.92 ahead of New York open before staging a recovery to 106.23 in New York due to rising U.S. Treasury yields and solid gains in U.S. stocks but only to fall again to session lows of 105.91 on sharp retreat in U.S. yields.  
  
The single currency went through a roller-coaster ride as despite initial rebound to 1.1227 in European morning, price then dropped to 1.1182 at New York open. However, euro erased its losses and rallied to an intra-day high at 1.1231 in New York morning due partly to news that Germany to issue new debt before falling again to session lows at 1.1178 near the close on cross-selling in euro.    
Reuters reported Germany is mulling a fiscal policy U-turn and considering ditching its long cherished balanced budget goal by issuing new debt to finance a costly climate protection package, a senior government official told Reuters on condition of anonymity.  "The challenge now is how to shape such a fundamental shift in fiscal policy without opening the flood gates for the federal budget," said the senior government official with knowledge of the internal discussions in the finance ministry.   
"Because once it is clear that new debt is no longer a taboo, everyone raises a hand and wants more money," the official said. That's why Berlin would link and limit any new debt strictly to the climate protection package which Chancellor Angela Merkel's cabinet is expected to seal next month.  
  
The British pound traded with a firm bias and gained to 1.2174 in Asian morning, then to session highs at 1.2183 in early European morning. However, cable erased its gains and tumbled to an intra-day low at 1.2095 at New York open due partly to cross-selling in sterling especially vs euro. Price then staged a short-covering rebound to 1.2155 in New York before stabilising.  
  
In other news, Reuters reported President Donald Trump on Thursday again expressed dissatisfaction with the U.S. dollar's strength, saying the Federal Reserve's interest rates were harming American manufacturers.  "The Fed's high interest rate level, in comparison to other countries, is keeping the dollar high, making it more difficult for our great manufacturers like Caterpillar, Boeing, John Deere, our car companies, & others, to compete on a level playing field," Trump said in a series of tweets.   
On the data front, Reuters reported the number of Americans filing applications for unemployment benefits unexpectedly fell last week, suggesting the labor market remains strong even as the economy is slowing.    
Initial claims for state unemployment benefits declined 8,000 to a seasonally adjusted 209,000 for the week ended Aug. 3, the Labor Department said on Thursday. Data for the prior week was revised to show 2,000 more applications received than previously reported.  
  
  
Data to be released on Friday:  
  
Japan GDP, China PPI, CPI, Swiss unemployment rate, Germany exports, imports, trade balance, current account, France industrial output, Italy trade balance, global trade balance, CPI, CPI EU, U.K. NIESR GDP estimate, GDP, industrial output, manufacturing output, good trade balance, good trade balance non-EU, Canada housing starts, building permits, employment change, unemployment rate, and U.S. PPI, core PPI.