Euro settles near two-year highs; outlook bullish

3 hours ago (Jul 24, 2017 17:20)

 

© Reuters. FOREX-Euro settles near two-year highs; outlook bullish

* PMI data helps broader euro zone story; FX eyed

* Bets on a weaker dollar rise to highest since Feb 2013

* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh

By Saikat Chatterjee

LONDON, July 24 (Reuters) - The euro rose to a 23-month high against the dollar on Monday as investors remained bullish after latest business growth data for July pointed to only a mild slowdown, suggesting the euro-zone economy was still growing at a relatively strong clip.

IHS Markit's Euro Zone Flash Composite Purchasing Managers' Index for July, seen as a good guide to economic growth, fell to 55.8 from June's 56.3, still comfortably above the 50 level that separates growth from contraction. data calmed some concerns that the euro's strength this year EUR=EBS has hurt growth prospects in the euro zone.

In a note after the data, Citigroup (NYSE:C) strategists said "the level of the composite PMI remains high and its sub-components, i.e., strong job creation, firms' sustained optimism and solid pace of activity in services, suggest continued resilience of the euro area recovery".

The single currency was trading at $1.16465, slightly below a high of $1.16840 hit earlier in the day, a level last seen in August 2015. It is the best performing pair in the G10 FX space, up more than 10 percent so far this year.

The euro's rise has also not invited criticism from policymakers, prompting some investment banks to come out with bullish calls. JP Morgan, for example, recommends staying long euros and buy short-dated FX calls vs the U.S dollar.

European Central Bank President Mario Draghi said on Thursday that financing conditions remained broadly supportive, and noted that the euro's appreciation had "received some attention". However, he did not cite that as a problem nor did he directly try to talk the currency down. market positioning also paint a bullish outlook for the euro. One year risk-reversals EUR1YRR=FN on the euro are nearing their highest levels since October 2009.

In contrast, the U.S. dollar has been hit by softening US yields and weak data.

Speculative "short" bets against the U.S. dollar reached the highest since February 2013 NETUSDALL= last week, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday.

"A weaker dollar seems to be the path of least resistance given the soft data coming out of the U.S. and the political uncertainty," said Michael Hewson, chief markets strategist at CMC (NS:CMC) Markets in London.

On Monday, the dollar index .DXY , measuring the currency's strength against a basket of other currencies, fell to 93.823, its lowest level since June 2016. It recovered somewhat to be up 0.1 percent on the day at 93.96.

Investigations into alleged Russian meddling in the 2016 U.S. presidential election and whether there was collusion with President Donald Trump's campaign are viewed as obstacles to the administration's plans to boost economic growth and a negative for the dollar. expect little relief for the dollar in a week marked by the U.S. Federal Reserve's regular meeting on policy, with the index on track to test the June 2016 lows of 93.451

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U.S. dollar wallows near 13-month lows

© Reuters. U.S. dollar wallows near 13-month lows

Investing.com - The U.S. dollar was nursing losses near 13-month lows against a currency basket on Monday, as sentiment on the greenback remained negative amid political uncertainty in Washington.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 93.84 by 10.47 a.m. ET (02.47 p.m. GMT) after touching 93.65 overnight, its lowest since June 22, 2016.

Worries over policy direction from the White House and Capitol Hill since last week’s failed attempt to overhaul healthcare and investigations into alleged links between President Donald Trump’s campaign and Russia in last year’s election have fed into dollar weakness.

The failure to pass healthcare reform has dampened hopes for the passage of Trump’s other legislative efforts, such as overhauling the tax code and implementing fiscal stimulus.

Political developments remained in the spotlight on Monday following reports that Trump was set make a statement on health care at 3:15 p.m. ET.

Hopes for tax reforms and fiscal stimulus under the Trump administration helped drive the dollar to a 14-year high after the November election. The dollar has now given up all of its post-election gains.

Doubts over the Federal Reserve’s plans for a third rate hike this year have also pressured the dollar lower.

The Fed is to hold its next meeting on Wednesday and is widely expected to hold policy steady. Officials may also give some insight into its plans to start normalizing its balance sheet.

The euro was slightly lower against the dollar, with EUR/USD slipping to 1.1638, after touching a 23-month high of 1.1684 earlier.

Demand for the euro was underpinned by expectations that the European Central Bank is moving closer to tapering its bond-buying program.

The euro came off the day’s highs after data pointing to a slowdown in euro area private sector growth at the start of the second half of 2017.

The dollar slid to five-week lows against the yen, with USD/JPY falling to 110.62. it was last at 111.00.

Sterling pushed higher against the greenback, with GBP/USD rising 0.25% to 1.3025.

The Canadian dollar hit fresh 14-month highs, with USD/CAD falling 0.3% to 1.2501.

The loonie was boosted by official data showing that Canadian wholesale trade rose more than expected in May and higher prices for oil, a major Canadian export.

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FOREX-Dollar index near 13-month low as U.S. political turmoil weighs, euro buoyant

FOREX-Dollar index near 13-month low as U.S. political turmoil weighs, euro buoyant

* Euro near 23-month highs and yen hits 5-week peak vs dollar

* Dollar wobbles, Spicer resignation seen as blow to Trump

* Bets on USD swings to net short for 1st time in more than a year (Adds details and quotes, updates prices)

By Shinichi Saoshiro

TOKYO, July 24 (Reuters) - The dollar struggled near a 13-month low against a basket of major currencies on Monday as U.S. political turmoil dampened hopes for quick passage of President Donald Trump's stimulus and tax reform agendas and the euro extended gains.

The Trump administration, already dogged by investigations into alleged Russian meddling in the U.S. election, took a fresh hit on Friday after White House spokesman Sean Spicer resigned, highlighting the upheaval within the president's inner circle. dollar index, which tracks the greenback against six major currencies, was little changed at 93.887 .DXY , after touching 93.823, its lowest since June 2016.

"For any chance of the dollar bouncing back in the near term, it will need a rebound in U.S. yields," said Junichi Ishikawa, senior forex strategist at IG Securities in Tokyo.

"The current U.S. political situation is weighing heavily on U.S. yields. So we will need strong U.S. data to dislodge U.S. yields from their low levels," he said.

The benchmark 10-year U.S. Treasury note yield US10YT=RR hit a three-week low on Friday, as a retreat on Wall Street kindled safe-haven demand for debt. US/

The euro was steady at $1.1668 EUR= after inching up earlier to a 23-month high of $1.1684.

The common currency's advance was limited after euro zone yields fell across the board on Friday, with the strong currency prompting investors to question the timing of the ECB's planned stimulus withdrawal. GVD/EUR

The euro has been on strong footing this month after what the markets perceived as hawkish talk from ECB President Mario Draghi reinforced views that the central bank would begin moving away from its easy policy sooner rather than later. Neither did he express any concern at the currency's strength.

The dollar slipped 0.15 percent to 110.970 yen JPY= , with the Japanese currency at its strongest in roughly five weeks.

Speculators' bets on the U.S. dollar swung to a net short for the first time in more than a year, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday. to the same data, Japanese yen net shorts grew to their largest since January 2014.

Koji Fukaya, president at FPG Securities in Tokyo, said the high level of yen shorts probably reflected yen trades versus non-dollar currencies, so called cross trades.

"A lot of the selling pressure on the yen is channelled through cross yen pairs. That is why dollar/yen has been weak despite the large net short positions built up against the yen."

The Bank of Japan has stuck to its easy monetary policy while other major central banks have signalled shifts to normalising policy, which is why some investors have expected a weaker yen.

The Japanese currency stood in proximity of a 17-month low against the euro EURJPY= and a 19-month trough versus the Australian dollar AUDJPY= .

The Australian dollar traded at $0.7923 AUD=D4 after being pushed down from a 26-month high of $0.7992 scaled on Friday.

The Aussie had advanced on the dollar's broad weakness before its rally was tempered by dovish comments from Reserve Bank of Australia (RBA) deputy governor Guy Debelle on Friday.

The New Zealand dollar fared better, staying in close reach of $0.7460 NZD=D4 , its highest since September 2016 scaled on Friday.

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Dollar falls on perceived ECB path, U.S. political roadblocks

Dollar Falls

(Updates prices, adds comments; changes byline, dateline, pvs LONDON)

* ECB policy meeting seen as supportive for single currency

* Investigations into Russian meddling in U.S. election hurt dollar

* Dollar index touches more than 1-year low

By Sam Forgione
[caption width="800" align="alignnone"] © Reuters. FOREX-Dollar falls on perceived ECB path, U.S. political roadblocks
[/caption]

NEW YORK, July 21 (Reuters) - The U.S. dollar hit its lowest level in more than a year against a basket of major rivals on Friday a day after the European Central Bank's chief abstained from talking down the euro, while obstacles to U.S. President Donald Trump's policy agenda also weighed.

ECB President Mario Draghi said on Thursday that financing conditions remained broadly supportive, and noted that the euro's appreciation had "received some attention." However, he did not cite that strength as a problem nor did he directly try to talk the currency down. apparent lack of concern about the strengthening euro convinced traders that the central bank remained on track to potentially begin tapering its bond-buying stimulus later this year.

The dollar index touched 93.952 .DXY , its lowest level since June of last year, and was last down 0.3 percent at 94.032. The euro touched $1.1677 EUR= , its highest level against the dollar in nearly two years, and was last up 0.2 percent on the day at $1.1653.

"The fact that Draghi didn't necessarily argue too much against the strength of the euro ... certainly gave the greenlight for individuals to want to own the currency again or actually add to their positions," said Dean Popplewell, chief currency strategist at Oanda in Toronto.

The dollar touched a more than four-week low against the yen of 111.09 yen JPY= .

In addition to traders' expectations that the ECB was staying the course toward tightening monetary policy, investigations into alleged Russian meddling in the U.S. election and possible collusion with Trump's campaign were viewed as obstacles to the administration's pro-growth agenda and negative for the dollar.

"Compounding the (weaker dollar) move is this latest news on the political front in the U.S. about the Russia investigation expanding to Trump's business affairs," said Alvise Marino, FX strategist at Credit Suisse (SIX:CSGN) in New York.

"This is on top of the fact that Senate has not been able to pass anything meaningful on the healthcare front," he said in reference to the collapse late on Monday of a Republican effort to overhaul the U.S. healthcare system.

The dollar also touched its lowest against the Swiss franc in more than a year at 0.9468 franc CHF= . The euro was last on track to gain 1.6 percent for the week, which would mark its second straight weekly rise against the dollar
Source: http://www.reuters.com/article/global-forex-idUSL1N1KC0Q7

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