Dollar falls on return of risk appetite, euro rallies news of purchase of German business by Japan's MUFJ

Market Review - 12/04/2019  16:03GMT  

Dollar falls on return of risk appetite, euro rallies news of purchase of German buisness by Japan's MUFJ

The greenback was broadly lower against its peers except safe-haven yen on Friday as global economy stabilized which triggered investors to buy riskier assets. The single currency traded with a firm bias and rallied to a 2-week high on acquisition of a German aviation finance business by a Japan's MUFJ bank.  
  
Versus the Japanese yen, dollar found renewed buying at 110.59 in Australia and rose to 111.80 at Asian open and then rose steadily to 112.00 at New York open due to active buying in eur/yen cross linked to the MUFJ deal. Despite retreating to 111.87, price climbed to a 1-month high at 112.09 near the close.  
  
The single currency jumped at Asian open and then climbed to 1.1295 in Asian morning, intra-day rally then accelerated in European morning and euro rose to a 2-week high of 1.1325 (Reuters) in New York morning after news report that a foreign bank was preparing to fund an acquisition of a European company before retreating to 1.1393 on profit-taking.  
  
Reuters reported Japan's Mitsubishi UFJ Financial Group has agreed to buy the aviation financing business of Germany's DZ Bank as it expands further into the sector and becomes more international.  
Under the deal, MUFG Bank and BOT Lease have agreed to take on the entire aviation finance portfolio of DZ Bank's DVB, which stood at 5.6 billion euros ($6.4 billion) in June 2018, the banks said in a statement.  
  
The British pound went through a roller-coaster ride. Cable initially gained to 1.3081 in Asia and despite weakening to 1.3052 in European morning, price found renewed buying and rallied to a 1-week high at 1.3133 in New York morning as Brexit concerns easeed due to the long delay together with dollar's weakness before retreating to 1.3068 due to cross-selling in sterling.  
In other news, Reuters reported British finance minister Philip Hammond said on Friday it was very likely that the idea of a second Brexit referendum would be put to parliament at some point, but time was tight before October when Britain is due to leave the European Union.   
Hammond, speaking to reporters in Washington where he is attending meetings at the International Monetary Fund, also said he expected the government and the opposition Labour Party would strike a deal on how to break the Brexit impasse in parliament in the next couple of months.   
  
Reuters reported the euro zone economy appears to be stabilising in the second quarter so the European Central Bank's projection for a rebound in the second half of the year remains on track, ECB Chief Economist Peter Praet said on Friday.   
  
On the data front, Reuters reported U.S. import prices increased for a third straight month in March, driven by higher fuel prices, but the underlying trend remained soft.  
The Labor Department said on Friday import prices rose 0.6 percent last month, boosted by increases in the costs of fuels and industrial supplies. Data for February was revised higher to show import prices rising 1.0 percent, the largest monthly advance since May 2016. Economists polled by Reuters had forecast import prices rising 0.4 percent in March.  
Export prices rose 0.7 percent in March, after rising by the same margin in February. Economists had expected a 0.2 percent gain.  
  
Data to be released this week :  
  
Swiss producer/import price, and U.S. NY Fed manufacturing index on Monday.  
  
China house price index, UK claimant count, ILO unemployment rate, employment change, average weekly earnings, Germany ZEW economic sentiment, ZEW current conditions, EU construction output, ZEW economic sentiment, New Zealand GDT price index, Canada manufacturing sales, and U.S. redbook, industrial production, capacity utilization, manufacturing output, wholesale inventories, NAHB housing market index on Tuesday.  
  
New Zealand CPI, Japan exports, imports, trade balance, industrial output, capacity utilization, China industrial output, retail sales, GDP, Italy consumer prices, trade balance, global EU current account, trade balance, HICP, UK CPI, RPI, PPI input prices, PPI output prices, U.S. MBA mortgage application, trade balance, wholesale sales, and Canada CPI, trade balance, exports, imports on Wednesday.  
  
Australia manufacturing PMI, services PMI, employment change, unemployment rate, Germany producer prices, Markit manufacturing PMI, Markit services PMI, Swiss trade balance, imports, exports, France Markit manufacturing PMI, Markit services PMI, EU Markit manufacturing PMI, Markit services PMI, UK retail sales, Italy industrial orders, industrial sales, U.S. initial jobless claims, Philadelphia Fed survey, retail sales, Markit manufacturing PMI, Markit services PMI, business inventories, leading indicator, and Canada ADP employment change, retail sales on Thursday.  
  
Australia market holiday, New Zealand market holiday, Japan national CPI, Swiss market holiday, Germany market holiday, Italy market holiday, business confidence, consumer confidence, France market holiday, UK market holiday, Canada market holiday, and U.S. market holiday, building permits, housing starts on Friday.