Dollar heads for worst week in over a year amid political uncertainty
Europe and Tokyo in Asia [.T] also eked out gains, while demand for safe-haven bonds had also eased.
But unsteadiness persists as gold moved higher again for its best week since April and the dollar also slipped falling to its lowest level since November.
“While U.S. markets managed to stage a moderate recovery with investors finding good entry points after the heavy sell-off, Asian investors are likely choosing to err on the cautious side, especially with multiple event-risks in the week ahead.”These events include testimony by former Federal Bureau of Investigation director James Comey at a Senate hearing and an OPEC meeting in Vienna, she added”.
The gradual return of risk appetite on Friday also saw investors switch from highly rated U.S. treasuries and European government bonds into higher-yielding Italian and Portuguese debt. But it was quickly back on the defensive in early European deals, trading flat on the day against the basket of currencies used to measure its broader strength and up just 0.2 percent from its lows against the yen and euro.
The greenback also sank against emerging market currencies, which were dragged lower on Thursday by news that Brazilian President Michel Temer had been recorded offering bribes to silence testimony by a potential witness in the country’s wide-ranging corruption probe.
Sterling regained a foothold above $1.30, up 0.6% on the day at $1.302, clawing back ground lost in yesterday’s recovery rally for the dollar and United States markets.
The Brazilian real was fractionally weaker at 3.3685 per dollar on Friday, after plunging as much as 8.5 percent to its lowest level since December on Thursday. However, we believe the underlying fundamentals of the markets remain strong as evidenced by double-digit earnings growth in the first quarter of this year, low interest rates and ample liquidity in the banking system, ‘ he said.
Paresh Upadhyaya, director of currency strategy at fund group Pioneer Investments, said this week’s fall for the dollar was an acceleration of a trend that had been building since the turn of the year. “But in the medium term, the next three to six months, this is not necessarily a threat to [emerging markets] more broadly”.
MSCI’s emerging markets index extended losses by 0.15 percent on Friday. It rose 0.95 per cent yesterday to a six-month high of US$1.1205.
In commodities, oil prices continued their gains for the third straight session, set to post a 4 percent weekly rise, on optimism that producers will agree to rein in output for longer.
US crude rose 2.15 percent to $50.41 per barrel and Brent was last at $53.71, up 2.29 percent on the day.
USA stocks ended up but well off the session highs on Friday after two new reports related to a US federal investigation into possible coordination between Russian Federation and President Donald Trump’s campaign renewed concerns about his political future.
Spot gold was up 0.6 percent at $1,253.87 an ounce by 2:47 p.m. EDT (1847 GMT), putting it up 2 percent for the week.
Global benchmark Brent was up 0.7 percent at $52.88, after touching a four-week high earlier in the session.