* Euro among best performers this week, up 1.8 pct vs USD
* Japan CPI & BoJ minutes due, ahead of US GDP
* Aussie, NZD near 3-month peaks as USD slips broadly
By Cecile Lefort
SYDNEY, Jan 27 (Reuters) - The euro held onto most recent hefty gains against the dollar on Friday, after hitting a five-week high, as the Fed's pledge to keep rates near zero for the next three years encouraged carry trades funded in dollars.
The euro traded at $1.3106, on track to be one of the best performers this week with a gain of 1.8 percent. It touched a high of $1.3184 Thursday but faltered short of major resistance in the $1.3199/1.3237 zone.
The dollar has lost ground broadly since the Federal Reserve surprised many by committing to keep rates low right out to late 2014, while suggesting further quantitative easing might be necessary.
That was a clear encouragement for using the dollar in carry trades and sparked big gains for gold and copper. The U.S. dollar index dropped to 79.414, having broken support at 97.50 to hit the lowest in over six weeks at 79.067.
"As the market digested signals that US monetary policy would likely be even looser than previously expected, government bonds were stronger globally, including both safe havens and riskier credits; the dollar fell, and commodities generally strengthened," wrote analysts at Barclays.
The FOMC move was also consistent with the stimulative message coming from other major central banks.
"These central banks have huge influence over global financial market conditions and the FOMC statement adds to the potential upside for risky assets."
That added further vim to commodity currencies with the Australian and New Zealand dollars up near three-month highs. The kiwi has been a clear outperformer this year with a gain of 5.8 percent, while the Aussie has added more than 4 percent.
The dollar even slipped against the yen to 77.42, having failed to hold a three-month peak of 78.28 this week. Strong technical resistance was cited around the 200-day moving average of 78.33 yen.
Investors' attention will again focus on Greece as debt talks with private creditors resume on Friday. Any resolution to avoid a messy default could see the euro break higher.
"The ability of this rally to extend is likely to depend on the view on Europe," wrote National Australia Bank in a note to clients.
Greek media reported debt holders may be ready to accept a yield of 3.75 percent on new Greek bonds after euro zone ministers rejected on Monday an earlier offer of 4 percent.
Greece and its EU/IMF lenders were aiming for an interest rate of 3.5 percent.
Further improvement in the U.S. economy with new orders for U.S. manufacturing goods posting a higher number than expected boosted riskier assets.
The United States will release its GDP numbers later on Friday with forecasts pointing to a 3 percent bounce in Q4. This should further underpin risk appetite.
"The big surprise would be if it came in weaker than expected," said National Australia Bank.
Japan is due to release inflation data and the minutes of the central bank's December meeting.
China's markets remain shut for the Lunar New Year holiday.
* Japan CPI & BoJ minutes due, ahead of US GDP
* Aussie, NZD near 3-month peaks as USD slips broadly
By Cecile Lefort
SYDNEY, Jan 27 (Reuters) - The euro held onto most recent hefty gains against the dollar on Friday, after hitting a five-week high, as the Fed's pledge to keep rates near zero for the next three years encouraged carry trades funded in dollars.
The euro traded at $1.3106, on track to be one of the best performers this week with a gain of 1.8 percent. It touched a high of $1.3184 Thursday but faltered short of major resistance in the $1.3199/1.3237 zone.
The dollar has lost ground broadly since the Federal Reserve surprised many by committing to keep rates low right out to late 2014, while suggesting further quantitative easing might be necessary.
That was a clear encouragement for using the dollar in carry trades and sparked big gains for gold and copper. The U.S. dollar index dropped to 79.414, having broken support at 97.50 to hit the lowest in over six weeks at 79.067.
"As the market digested signals that US monetary policy would likely be even looser than previously expected, government bonds were stronger globally, including both safe havens and riskier credits; the dollar fell, and commodities generally strengthened," wrote analysts at Barclays.
The FOMC move was also consistent with the stimulative message coming from other major central banks.
"These central banks have huge influence over global financial market conditions and the FOMC statement adds to the potential upside for risky assets."
That added further vim to commodity currencies with the Australian and New Zealand dollars up near three-month highs. The kiwi has been a clear outperformer this year with a gain of 5.8 percent, while the Aussie has added more than 4 percent.
The dollar even slipped against the yen to 77.42, having failed to hold a three-month peak of 78.28 this week. Strong technical resistance was cited around the 200-day moving average of 78.33 yen.
Investors' attention will again focus on Greece as debt talks with private creditors resume on Friday. Any resolution to avoid a messy default could see the euro break higher.
"The ability of this rally to extend is likely to depend on the view on Europe," wrote National Australia Bank in a note to clients.
Greek media reported debt holders may be ready to accept a yield of 3.75 percent on new Greek bonds after euro zone ministers rejected on Monday an earlier offer of 4 percent.
Greece and its EU/IMF lenders were aiming for an interest rate of 3.5 percent.
Further improvement in the U.S. economy with new orders for U.S. manufacturing goods posting a higher number than expected boosted riskier assets.
The United States will release its GDP numbers later on Friday with forecasts pointing to a 3 percent bounce in Q4. This should further underpin risk appetite.
"The big surprise would be if it came in weaker than expected," said National Australia Bank.
Japan is due to release inflation data and the minutes of the central bank's December meeting.
China's markets remain shut for the Lunar New Year holiday.
No comments:
Post a Comment