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FOREX-Dollar heading for longest weekly losing streak since July

By on April 30, 2021 0

* Chart: Global exchange rates https://tmsnrt.rs/2RBWI5E

By Ritvik Carvalho and Kevin Buckland

LONDON, April 30 (Reuters) – The US dollar slipped into a fourth consecutive weekly decline and its longest weekly streak of losses since last July against a basket of large peers on Friday, as the Federal Reserve stuck to its message extremely low interest rates longer.

The dollar index was on track to end the week down 0.2%, bringing its April losses to 2.7%. A four-week losing streak would be the longest since the six-week slide until the end of last July, and the monthly loss would also be the biggest since July’s 4% drop.

On Friday, the Canadian dollar climbed to a more than three-year high of C $ 1.2264 per greenback, on track for a 1.6% weekly gain that would be the highest since early November.

Following the Fed’s last policy meeting on Wednesday, President Jerome Powell acknowledged the growth of the US economy, but said there was not yet enough evidence of “substantial progress” towards recovery to justify a change in its ultra-flexible monetary parameters.

That economic growth accelerated in the first quarter, supported by government stimulus checks, paving the way for what is expected to be the best performance in nearly four decades this year.

Signs that a strengthening economy, especially in the labor market, could force the Fed to scale back its asset purchase program earlier had pushed the dollar index, or DXY, to a high of five months at the end of March.

DXY could attempt a rebound in the coming days as expectations turn to a potential blockbuster on April payrolls next week, but the gains will be short-lived with Fed officials emphasizing the stance strongly accommodating to Powell, ”the Westpac strategists wrote in a customer note.

The gauge is likely to drop below 90 in the near term, from 90.6 currently, but “DXY’s downward trend is probably more of an ongoing grind than a sharp setback,” they said.

The Fed’s dovishness contrasted sharply with the Bank of Canada, which has already started to cut back on asset purchases. The Canadian commodity-linked loonie got additional support as oil surged to a six-week high, as well as higher lumber prices.

Rising commodity prices also supported the Australian dollar, which gained 0.2% to $ 0.77785, climbing back to a six-week high of $ 0.78180 reached on Thursday.

“We believe the outperformance of pro-cyclical currencies (those exposed to the global economic cycle) should be a central theme for the remainder of the year, despite concerns about rising US yields,” said Chris Turner, Global Head of Markets. at ING.

The euro traded 0.2% lower at $ 1.21020, near the two-month high of $ 1.2150 set in the previous session. The shared currency is up 0.2% for the week and 3.3% for the month.

The yen, a traditional haven, also traded at 108.88 to the dollar, close to Thursday’s two-week low of 109.22, setting it up for a loss of around 0.9% for the week.

The Chinese yuan traded near its strongest since March 3 in the offshore market, with a final change of hands at 6.4711 per dollar, even as Chinese factory activity indicators posted a loss momentum in April.

The yuan jumped 1.5% this month from its four-month low of 6.5875 on April 1, but Mizuho strategist Ken Cheung wrote in a client note that a reassessment of growth trajectories for China relative to the United States would maintain the rally. check out from here.

In cryptocurrencies, the ether has hovered below the all-time high of $ 2,800.89 set on Thursday, after being lifted this week on media reports on the European Investment Bank’s plans to launch a sale of “bonds digital ”on the ethereum blockchain network.

“The use case of Ethereum has just grown exponentially,” particularly with the wider use of non-fungible tokens (NFTs), said Tim Frost, chief executive of financial technology company YIELD App.

“All signs point to a continued bull market.”

The biggest rival bitcoin traded at $ 54,343.80, hovering around that level this week after falling to $ 47,004.20 on Sunday, after falling sharply from the all-time high of $ 64,895.22 set in the middle of the month.

(Reporting by Ritvik Carvalho; Additional reporting by Kevin Buckland in Tokyo; Editing by Pravin Char)