Euro appreciation yen rebound vs. dollar enough to focus on Ukraine

The euro rose on Friday, but the dollar fell as concerns about a potential slowdown in the economy kept it narrow and investors priced the expected monetary tightening by the Federal Reserve.

“Prolonged Russian-related risks, high energy prices, and Fed-ECB policy differences combine to show that the EUR / USD is weaker than strong,” said an ING analyst.

UniCredit analysts said, “The EUR-USD is pretty stagnant around 1.10, and a higher-than-expected PMI survey across the euro area in March isn’t enough to motivate buying.” increase.

Germany’s business morals in March were exacerbated by rising gas prices and worsening supply chain problems due to driver shortages, according to a Friday survey.

“I think the ECB’s hawkish remarks favor a single currency,” said Roman Ziruk, market analyst at Ebury.

The European Central Bank will revisit its plans to end bond purchase stimulus measures this summer only if the eurozone economy is in a “serious recession,” said Isabel Schnabel, a member of the ECB’s board of directors. Said on Thursday.

ECB officials have recently downplayed the risk of a recession.

Single currency rose 0.15 percent to $ 1.10

MUFG’s Head of Global Market Research, Derek Harpeny, said in a note to clients that new optimism about the prospect of ending the conflict in Ukraine “improves financial market conditions and weakens the US dollar. It was helpful. “

The US dollar index, which measures greenbacks for six peers, fell 0.1% to 98.632.

Analysts at BofA said the market priced much faster than the previous tightening cycle from 2015 to 2018 regarding the possibility of the Fed’s next rate hike.

Money markets are betting that the Fed will raise benchmark overnight rates by 190 basis points by the end of this year. This includes an 80 percent chance of raising half a percentage point at the May 3-4 policy meeting.

The Japanese yen rose 0.6% against the greenback and rebounded at 121.6. Overnight, due to differences in interest rate hike expectations between the Bank of Japan (Bank of Japan) and other major central banks, it reached 122.44, the lowest level since December 2015.

Analysts said the Bank of Japan was bullish as 10-year Treasury yields were above the level the central bank offered to buy unlimited amounts in February, but refrained from entering the market on Friday morning. Flagged to have provided the signal for.

However, Governor Haruhiko Kuroda has revealed that the depreciation of the yen will bring benefits to the economy.

We do not expect “yen vs. dollar depreciation”. At 115, given the dovish stance of the central bank, I think it’s quite worth it, “added Ebury’s Ziruk.

Norwegian krone has said it has fallen 0.2% against the euro after rising the day before as the central bank raised benchmark rates, and now plans to raise it at a faster pace than previously intended.

Bitcoin rose 1.4% to about $ 44,520.

Stefano Rebaud