The greenback fell across the board on Friday on market optimism U.S.-China phase one trade deal will be signed-off soon boosted risk appetite, also falling U.S. Treasury yields triggered long liquidation in USD positions.
Versus the Japanese yen, although dollar initially dipped to 109.44 at Asian open on falling U.S. Treasury yields, price rebounded to 109.52 at European open, and then to 109.58 in New York on initial gains in U.S. stocks before weakening again and hit session lows of 109.39 in afternoon trading.
The single currency found renewed buying at 1.1095 in Australia and rose to 1.1121 in Asia on buying in EUR/JPY cross, the pair then climbed higher in tandem with sterling and later hit an 11-day high at 1.1187 in New York on usd's weakness before stabilising, price last traded at 1.1175 near the close.
Reuters reported European Central Bank policymaker Robert Holzmann said the bank was unlikely to be in a position to lift interest rates back into positive territory in 2020, with Brexit likely to be a renewed source of concern at the end of the year. "I do not expect a turnaround to a positive interest rate environment next year," Holzmann, who heads the Austrian central bank, said in a statement on Friday. He said concern would grow again next December when Britain's transition period for its withdrawal from the European Union is due to end. "There is little time for negotiations on future relations, and the outcome of the negotiations is open."
Although the British pound briefly dipped to 1.2969 in Asian morning, renewed buying emerged and lifted price to 1.3007. Intra-day gain then accelerated at European open and the pair later rallied to a 1-week high at 1.3117 in New York before retreating to 1.3073 on profit-taking.
Reuters reported the European Union may need to extend the deadline for talks about a new trade relationship with Britain, European Commission President Ursula von der Leyen told French daily Les Echos in an interview published on Friday. Von der Leyen said both sides needed to seriously think about whether there is enough time to negotiate a new trade deal and work out agreements about a series of other issues. "It would be reasonable to evaluate the situation mid-year and then, if necessary, agree on extending the transition period," she told the paper.
Britain has set a hard deadline of December 2020 for reaching a new trade deal with the EU, betting that the prospect of another Brexit cliff-edge would force Brussels to move quickly to seal an accord.
Economic data to be released next week :
Germany retail sales, Swiss KOF indicator, UK BBA mortgage application and U.S. goods trade balance, wholesale inventories, Chicago PMI, pending home sales, Dallas Fed manufacturing business index on Monday.
China NBS manufacturing PMI, NBS non-manufacturing PMI and U.S. redbook, monthly home price, CS home price, consumer confidence on Tuesday.
New Zealand market holiday, Australia market holiday, Japan market holiday, China market holiday, Italy market holiday, France market holiday, Germany market holiday, Swiss market holiday, UK market holiday, U.S. market holiday and Canada market holiday on Wednesday.
New Zealand market holiday, China Caixin manufacturing PMI, EU Markit manufacturing PMI, Italy Markit manufacturing PMI, France Markit manufacturing PMI, Germany Markit manufacturing PMI, UK Markit manufacturing PMI, U.S. Markit manufacturing PMI, MBA mortgage application, initial jobless claims and Canada Markit manufacturing PMI on Thursday.
UK nationwide house price, France CPI (EU norm), CPI, Germany CPI, unemployment change, unemployment rate, HICP, Swiss manufacturing PMI and U.S. construction spending, ISM manufacturing PMI on Friday.
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