Raise Money

19/02/2021

The pound surged to nearly three-year highs against the dollar Thursday, and is likely to continue its upward trajectory over the short-term, but could be in for rude awakening once the impact of Brexit begins to make its mark.

GBP/USD rose 0.81% to $1.3965 reaching its highest level March 2018.

The sharp jump in the pound comes as U.K. Prime Minister Boris Johnson recently said the lockdown restrictions would be lifted in stages. The prime minister has appeared eager to quell growing optimism over a faster reopening, insisting further data was needed on how much vaccines can reduce transmission rates.

Further data from the U.K.'s vaccine roll out is expected Friday, though it is unclear whether it will how effective the vaccine is at reducing the spread of infection.

While the successful vaccination campaign in the U.K. is "fueling hopes for a quick recovery and boosting the pound, … once the effects of the Brexit become more apparent, the trend is likely to turn again," Commerzbank (DE:CBKG) said.

It may, however, take a "considerable time before the impact of the pandemic and that of Brexit become more clearly distinguishable … due to the Corona-related lockdown, " Commerzbank said.

Still, those willing to stick with the pound are likely to be rewarded as the "chances are good that the pound will appreciate significantly more in the short term than we currently assume in our forecasts," it added.

The latest CFTC positioning data on the pound showed speculators materially added to their bullish positions.

Bullish bets on the pound jumped to an 11-month high against the dollar, according to CFTC data for the week ending Feb .9.

19/02/2021

The dollar was up on Friday morning in Asia, clawing back some losses. The U.S. currency saw its biggest losses in ten days after disappointing U.S. labor data finally dented recent optimism for the country’s quick economic recovery from COVID-19.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.09% to 90.632 by 9:16 PM ET (2:16 AM GMT). The index was little changed as Friday’s session opened, after it dropped 0.4% overnight.

The USD/JPY pair inched up 0.06% to 105.72. The dollar was little changed against the safe-haven yen after two consecutive days of retreat from a five-month high hit on Wednesday.

The AUD/USD pair inched down to 0.06% to 0.7762 and the NZD/USD pair edged down 0.19% to 0.7206.

The USD/CNY pair was down 0.27% to 6.4691.

The GBP/USD pair edged down 0.12% to 1.3954. The pound was mostly flat after climbing to an almost three-year high during the previous session, the highest gains in more than a month, as the U.K. continues to roll out an ambitious COVID-19 vaccination program.

Elsewhere in Europe, the euro was also flat after gaining 0.4% overnight.

The greenback is slowly returning to its safe-haven asset role, but sentiment was soured by the unexpected rise in the number of U.S. jobless claims. A total of 861,000 claims were filed during the previous week, against the 765,000 claims in forecasts prepared by Investing.com and the 848,000 claims filed during the previous week.

The disappointing data is impacting the dollar, however, even as progress is made on a $1.9 trillion stimulus package proposed by President Joe Biden and other economic indicators are more positive.

“The prospect of a massive U.S. fiscal stimulus plus a successful vaccine roll-out are solid arguments to bet on a U.S. recovery this year … but the overnight jobless claims data serve as a reminder of the unevenness of the recovery so far,” National Australia Bank (OTC:NABZY) senior foreign exchange strategist Rodrigo Catril said in a note.

Cryptocurrencies took a little breather, with bitcoin near the $51,500 mark after reaching a record $52,604 in a rally driven by endorsements from Tesla Inc. (NASDAQ:TSLA) among others. It has risen around 71% in 2021 to date, after it more than quadrupled in 2020.

Ethereum took advantage of its larger rival’s breather, climbing to a record high of $1,951.89 on Friday, soaring around 162% in 2021. It was also boosted after chipmaker NVIDIA Corp. (NASDAQ:NVDA) announced a new processor designed specifically for mining the cryptocurrency.

19/02/2021

The U.S. dollar paused on Friday after its biggest loss in 10 days as disappointing U.S. labour market data bruised optimism for a speedy recovery from the COVID-19 pandemic.

The greenback continued to buck its traditional role as a safe-harbour currency, falling in sympathy with U.S. stocks overnight after an unexpected increase in weekly jobless claims soured the economic outlook.

The British pound traded near an almost three-year high reached overnight, when it surged the most in more than a month, amid Britain's aggressive vaccination programme.

The dollar index was little changed at 90.561 in the Asian session, after a 0.4% decline overnight cut short a two-day winning streak. For the week, the gauge is now back to more or less break-even.

The string of soft labour data is weighing on the dollar even as other indicators have shown resilience, and as President Joe Biden's pandemic relief efforts take shape, including a proposed $1.9 trillion spending package.

"The prospect of a massive U.S. fiscal stimulus plus a successful vaccine roll-out are solid arguments to bet on a U.S. recovery this year," Rodrigo Catril, senior foreign exchange strategist at National Australia Bank (OTC:NABZY) in Sydney, wrote in a client note.

"But the overnight jobless claims data serve as a reminder of the unevenness of the recovery so far."

Sterling was mostly flat at $1.3965 on Friday following a 0.8% jump in the previous session, when it rose as high as $1.3986 for the first time since April 2018.

The euro was little changed at $1.2093 after rising 0.4% overnight.

The dollar bought 105.555 yen, little changed following a two-day retreat from the five-month high of 106.225 reached Wednesday.

Many analyst expect the dollar to weaken over the course of the year as it has traditionally done during times of global economic recovery, though it might take some time to develop.

"It looks to me like there’s some exhaustion in that just-straight global reflation theme," leading the dollar to trend largely sideways for now, said Daniel Been, head of FX at ANZ in Sydney.

The trade should reignite once fiscal stimulus starts to kick in and services start to reopen in a more fulsome way, he said.

"We see it broadly as a dollar-negative story," he said.

In cryptocurrencies, bitcoin traded at $51,335.71, consolidating for a second day after hitting a record $52,640 on Wednesday in a rally fuelled by endorsements from Tesla (NASDAQ:TSLA) Inc and others. It has risen about 78% so far in 2021, after more than quadrupling last year.

Smaller rival ethereum rose to a record $1,951.89 on Friday, just pipping the previous day's high, before trading at $1,909.41. It has surged some 162% this year.

On Thursday, chipmaker Nvidia (NASDAQ:NVDA) Corp announced a new processor designed specifically for mining ethereum.

18/02/2021

The dollar was up on Thursday morning in Asia following its first back-to-back gains in two weeks overnight. Positive U.S. data that continued to raise hopes that the country will see a faster economic recovery from COVID-19 than its global peers.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.02% to 90.938 by 9:14 PM ET (2:14 AM GMT). The index has gained about 1% in 2021 to date, after rebounding from the almost 7% slide recorded in 2020 that extended to a two-and-a-half year low of 89.206 in early January.

The USD/JPY pair inched down 0.04% to 105.81. The yen was almost flat against the dollar on Thursday, after the dollar pulled back from an almost five-month high overnight.

The AUD/USD pair inched up 0.05% to 0.7752 while the NZD/USD pair inched down 0.07% to 7184.

The USD/CNY pair inched down 0.02% to 6.4527. Onshore trading in the yuan resumed as Chinese markets returned from a holiday.

The GBP/USD pair inched up 0.05% to 1.3860.

The euro was steady after dropping 0.5% overnight, the most in two weeks. Bitcoin continued its rally, hovering near a new record high of $52,640 during the previous session. However, the cryptocurrency’s surge of around 58% in February has prompted some investors to warn that the rally could be unstable.

Upbeat U.S. data released on Tuesday gave the greenback a boost. Core retail sales grew 5.9% month-on-month in January, compared to the 1% growth in forecasts prepared by Investing.com and the 1.8% fall recorded in December. The Producer Price Index grew 1.3% month-on-month in January, higher than the forecast 0.4% growth and December’s 0.3% growth. Retail sales grew 5.3% month-on-month in January, against the forecast 1.1% growth and December’s 1% fall.

Progress is also being made on the U.S.’ proposed $1.9 trillion stimulus package, with President Joe Biden meeting labor leaders on Wednesday to canvass support.

The Federal Reserve also released the minutes from its January policy meeting on Wednesday, reinforcing its to let the economy overheat while maintaining an ultra-accommodative monetary policy.

“Biden’s stimulus plans, a steep decline in new infections and rapid vaccine rollout leave the U.S. well positioned to recover sooner than most … that will generate periodic bouts of dollar upside,” Westpac analysts said in a note.

However, alongside other investors, the Westpac analysts expect the dollar to decline in 2021 due to the Fed’s relentless money printing. With that in mind, Westpac recommends fresh dollar index shorts on rallies toward 91.0.

18/02/2021

The dollar edged lower in early European trading Thursday, with riskier currencies more in favor after the minutes from the Federal Reserve’s latest meeting reinforced its easy policy stance.

At 3:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was down 0.1% at 90.903.

EUR/USD rose 0.1% to 1.2047, GBP/USD rose 0.1% to 1.3864, USD/JPY was down 0.1% at 105.81, while the risk-sensitive AUD/USD rose 0.1% to 0.7758.

The Federal Reserve released the minutes from its January policy meeting on Wednesday, and these reinforced its plans to let the economy overheat while maintaining an ultra-accommodative monetary policy.

“The Federal Reserve's meeting minutes showed that the central bank is upbeat on America's growth prospects in 2021 – more than beforehand,” said Yohay Elam, an analyst at FX Street, in a research note.

“However, the Fed seems unmoved from all the talk about higher inflation and is unlikely to raise rates nor taper its bond-buying scheme. Under these circumstances, the greenback will likely remain under pressure.”

Progress is being made on President Joe Biden’s proposed $1.9 trillion stimulus package, with the president meeting labor leaders on Wednesday to canvass support.

This package is prompting much discussion over the likely path of inflation levels going forward, given it’s expected to be largely funded by borrowing.

The U.S. economy received some positive news Wednesday, as retail sales grew 5.3% month-on-month in January, against the forecast 1.1% growth and December’s 1% fall.

“Some are concerned that this good news is bad news - as it may lower pressure for stimulus,” added Elam. “However, unemployment remains high, with some ten million Americans still out of work. Weekly jobless claims are set to provide a reminder that the economy is still struggling.”

Weekly initial jobless claims are due for release at 8:30 AM ET (1330 GMT).

Elsewhere, USD/TRY pushed 0.1% higher to 6.9684 ahead of the latest meeting of Turkey’s central bank, where interest rates are expected to remain unchanged at 17% for a second month.

The lira has soared against the dollar since President Recep Tayyip Erdogan overhauled his economic policy team in November, installing a new central bank governor who promptly instigated a series of rate hikes to support the previously battered currency.

Overnight, the Indonesian central bank cut its deposit and lending rates by 25 basis points each, as expected. The move reflected the rupiah's sustained strength over the last four months. The dollar edged up 0.1% against the rupiah as a result.

18/02/2021

The dollar pushed higher in early European trading Wednesday, following a surge in U.S. bond yields on the prospects of a prompt economic recovery and a possible acceleration in inflation.

At 3:55 AM ET (0755 GMT), the U.S. Dollar Index, which tracks the greenback against a basket of six other currencies, was up 0.3% at 90.757, bouncing from the three-week low of 90.117 hit on Tuesday.

EUR/USD dropped 0.3% to 1.2074, USD/JPY was flat at 106.06, after earlier hitting a five-month high, while the risk-sensitive AUD/USD fell 0.1% to 0.7746.

Benchmark 10-year Treasury yields made a fresh one-year high late Tuesday, rising as high as 1.333% from around 1.20% at the end of last week, and the prospect of better risk-free returns lent support to the U.S dollar.

Central to the discussion is the likely path of inflation levels going forward, particularly given the likelihood of the Biden administration getting its way and an additional $1.9 trillion of stimulus, largely funded by borrowing, being injected into the U.S. economy.

The gap between ten-year and two-year U.S. yields also widened to the largest level in nearly three years, suggesting investors don’t expect the Federal Reserve to lift interest rates in the short-term. But for how long will they be prepared to stay accommodative if inflation climbs above the 2% level?

The minutes later on Wednesday from the U.S Federal Reserve's January meeting will be closely watched for clues as to when the central bank will move.

“U.S. CPI inflation also disappointed a touch in January, which may have soothed some inflation fears. This will however all change in a couple of months’ time,” said analysts at Nordea, in a research note. “Indeed, we expect the current inflation breeze to strengthen into gale force winds by the second quarter, at least in terms of the market’s narrative.”

Elsewhere, GBP/USD fell 0.2% to 1.3878, weighed by the support for the dollar, even as U.K. inflation accelerated in January, with consumer prices increasing 0.7% from a year earlier, slightly up from 0.6% in December, the Office for National Statistics said Wednesday.

It leaves inflation well below the 2% level targeted by the Bank of England, which has cut interest rates and expanded its bond-buying program in response to the economic damage caused by pandemic.

11/02/2021

The dollar was down on Wednesday morning in Asia to near two-week lows as demand for safe-haven assets faded. Hopes for a global economic recovery from COVID-19 continue to grow alongside hopes for further, massive fiscal and monetary stimulus.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down 0.05% to 90.370 by 10:54 PM ET (3:54 AM GMT).

The USD/JPY pair inched down 0.02% to 104.55. The dollar gained 0.1% against the yen, after it dropped to 104.5, the lowest point so far in February, during the previous session.

The AUD/USD pair inched up 0.05% to 0.7742, while the NZD/USD pair inched down 0.04% to 0.7237.

The USD/CNY pair inched up 0.05% to 6.4378. Data released by China earlier in the day showed that the Consumer Price Index (CPI) grew 1% month-on-month but fell 0.3% year-on-year. The Producer Price Index (PPI) grew 0.3% year-on-year in January.

The GBP/USD pair inched up 0.07% to 1.3824. The pound was around 0.1% lower after reaching an almost three-year high during the previous session.

In the cryptocurrency space, Bitcoin was near the $46,500 mark after climbing up to $48,500 overnight on the back of a $1.5 billion investment from Tesla Inc. (NASDAQ:TSLA).

“The economic outlook for the year, according to market consensus, appears to be buoyant,” CMC Markets chief strategist Michael McCarthy told Reuters, pointing to the weaker dollar.

“Sentiment and positioning are key drivers of the market right now,” he added.

Hopes that monetary and fiscal support, solid corporate earnings, and the rollout of COIVD-19 vaccines have all boosted hopes for the U.S. economic recovery. The increased risk sentiment has meant declines for safe-haven assets such as the dollar.

Investors remain divided about the impact that a $1.9 trillion stimulus package proposed by U.S. President Joe Biden will have on the dollar.

Those arguing for a positive impact point to a speedy U.S. recovery compared to other economies boosting the greenback. Those arguing the opposite say that a recovery will drive reflation globally, which will boost riskier assets and contribute to a dollar decline.

Westpac analysts argued the latter in a note, despite the dollar’s strong start in 2021, with the previous week’s U.S. jobs data a key indicator.

“Friday’s disappointing payrolls completely flattened the USD, that data point casting doubt on the budding U.S. outperformance narrative and refocusing minds on the prospect for sustained reflationary U.S. fiscal and monetary policy,” the note added.

11/02/2021

The dollar edged lower in early European trading Wednesday, trading near two-week lows, as optimism over a global economic recovery weakens demand for this safe haven.

At 3:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was down 0.1% at 90.343, after earlier falling as low as 90.332 for the first time this month.

USD/JPY traded down 0.1% at 104.52, GBP/USD was up 0.1% at 1.3824, its highest since April 2018, EUR/USD climbed 0.1% to 1.2132, while the risk-sensitive AUD/USD rose 0.1% to 0.7749.

The dollar has seen selling against major peers as risk sentiment has been bolstered by rising optimism that monetary and fiscal support from policymakers, robust corporate earnings and the prospect that coronavirus vaccines could hasten a return to normality, particularly in the U.S. and U.K. Central bank governors in both countries are due to speak later Wednesday, with attention focused on any possible reaction by Federal Reserve chairman Jerome Powell to U.S. consumer inflation numbers for January, which are due at 8:30 AM ET.

“Last Friday’s payrolls report showed that, despite a relatively small increase in payrolls of 49k, the unemployment rate continued to fall at a rapid clip, to 6.3% from 6.7% in December,” said analysts at Nordea, in a research note.

“In the coming months, payroll gains are likely to pick up significantly, driven by recent restaurant reopenings in California and New York, and fewer capacity restrictions in other states.”

Also expected to help the economic outlook is President Joe Biden's planned $1.9 trillion fiscal stimulus package, which now looks set to be implemented in the face of Republican opposition

Goldman Sachs (NYSE:GS) upgraded its outlook for the U.S. economy in 2021 on Tuesday, now expecting gross domestic product growth of 6.8% from 6.6% this year and 4.5% growth in 2022 from 4.3%.

The influential investment bank cited the Senate passing a budget resolution that paves the way for approval of the package.

Additionally, the U.S. Centers for Disease Control and Prevention said it had administered 43,206,190 doses of Covid-19 vaccines throughout the country as of Tuesday as the vaccination program is ramped up.

11/02/2021

The dollar was up on Thursday morning in Asia but continued to hover near two-week lows. Weaker-than-expected U.S. inflation and a promise from the Federal Reserve to keep interest rates low continued to raise investor expectations of meagre returns from the U.S. currency.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.01% to 90.415 by 9:53 AM ET (2:53 AM GMT). The index dropped to a two-week low of 90.249 after the release of the U.S. inflation data.

The USD/JPY pair inched up 0.03% to 104.60.

The AUD/USD pair inched up 0.03% to 0.7723, with the AUD just below the two-week high against the dollar touched during the previous session. The NZD/USD pair inched down 0.06% to 0.7209.

The USD/CNY pair was up 0.37% to 6.4582.

The GBP/USD pair inched up 0.05% to 1.3834. The pound was also boosted by diminishing expectations for negative interest rates in the U.K. and climbed towards a nearly three-year high.

In Asia, moves were slight in Japan and China, with both markets closed for holidays.

U.S. inflation data released on Wednesday showed that the core Consumer Price Index (CPI) was flat month-on-month, against the predicted 0.2% growth and the 0.1% growth recorded in December.

Fed Chairman Jerome Powell also noted that unemployment was still high, and re-iterated that the central bank’s new policy framework could accommodate annual inflation above 2% for some time before hiking rates, in his speech on Wednesday.

“In other words, easy policy is going to stay there for a long, long time, and that should be negative for the U.S. dollar,” Westpac currency analyst Imre Speizer told Reuters.

“I think it’ll be something that sits in the background, as just a reminder that the U.S. dollar can’t go up while it’s got that easy policy relative to everybody else,” Speizer added.

Inflation remains a concern, with predictions that pent-up demand and a low-base effect from 2020’s shocks will drive jumps in headline figures by spring. Such a scenario could test the Fed’s resolve.

Investors looked to New Zealand, where COVID-19 is firmly under control, but surging housing prices have pushed inflation above expectations. Investors have pared back further rate cut expectations in response.

“The Reserve Bank of New Zealand (RBNZ) arguably face quite a different communication challenge (to the Fed), with the demand pulse in New Zealand in a much better position than anyone dared hope,” ANZ Bank analysts said in a note.

“RBNZ will welcome this but continue to highlight the need for cautious patience,” the note added.

In Europe, investors await the release of the European Commission economic forecasts, due later in the day.

09/02/2021