Tokyo, April 27 (BNA): The euro hovered near a one-year high against the dollar on Thursday, as a resilient European economy contrasted with the risks of banking contagion in the United States, facing a debt ceiling and a potential recession.
The risk-sensitive Australian dollar struggled to stay above the key 66-cent mark, while its New Zealand counterpart rebounded after a survey showed retail and agricultural firms in general more optimistic.
Reuters reported that the yen was in a steady state as the Bank of Japan kicked off a two-day policy meeting, the first under new governor Kazuo Ueda.
Europe’s single currency rose 0.12% to $1.10525, heading back towards an overnight peak of $1.1096, the highest level since April last year.
The dollar index – which measures the greenback against six major peers, and the euro the heaviest weight – was little changed at 101.36, after falling 0.42% the day before, when it touched a two-week low of 101.00.
Germany again revised growth expectations upwards on Wednesday, and a survey showed a continued recovery in consumer confidence.
By contrast, spending on capital goods in the US fell more than expected in the latest data overnight, adding to concerns about deflation. The persistent downturn in First Republic Bank (FRCN) did not help the mood, or the continuing debate over extending the US debt ceiling.
Christina Clifton, chief currency strategist at the Commonwealth Bank of Australia, wrote: “A resilient eurozone economy combined with core inflation that is still rising rather than falling could see the European Central Bank (ECB) maintaining its hawkish stance, supporting euro”. Customer note.
At the same time, US inflation is showing stubborn decoupling with growth, which keeps pressure on the Federal Open Market Committee to tighten policy further, Clifton said. “The risk of more than one hike in the (Feed) funds rate is an upside risk for the US dollar in the coming months.”
Traders currently place odds of 77% on another quarter-point rise on May 3, but that is seen as the potential peak, with a cut-off of up to 2 points towards the end of the year.
IG analyst Tony Sycamore also sees risks to the downside for the EURUSD. As long as the pair remains below the monthly resistance at around 1.1075, “the EUR/USD remains vulnerable to a decline to 1.0800,” he wrote in one of the reports.
Meanwhile, the dollar was little changed at 133.68 yen. The market consensus is that Ueda will leave the ultra-easy policy settings unchanged on Friday, but no one is willing to rule out another surprise such as the sudden doubling of the 10-year yield range in December.
Australian dollar traders are more confident that the Reserve Bank of Australia will keep interest rates unchanged for a second meeting next week after some softness in consumer inflation data on Wednesday.
The currency rose 0.11% to $0.66115 on Thursday, after falling to a one-and-a-half-month low of $0.6592 in the previous session.
The New Zealand dollar rose 0.43% to $0.61415, recouping losses from the previous session after the ANZ Bank Business Confidence Survey showed some improvement among individual respondents and the agricultural sector, although the headline reading was largely unchanged.
The pound was steady at $1.2474, reserving Wednesday’s advance of 0.48%.
Leading bitcoin stabilized around $29,110, after a day when it jumped to $30,022, and then dropped to $27,242.
The initial strength was driven by US banking concerns, IG’s Sycamore says, but then the market was “seemingly freaked out by a large sell order”.
Although the submitted bitcoin could hold more than $25,000, Sycamore expects the token to test this month’s high of $31,035.
Rial