Dollar steadies after U.S. jobs-related losses - Reuters News
Dollar steadies after U.S. jobs-related losses - Reuters News
- Dollar index little changed after Friday payrolls fall
- Jobs data takes shine off dollar rebound
- Ethereum gains on futures debut
- Bitcoin hits record high after Tesla purchase
- Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
By Gertrude Chavez-Dreyfuss
NEW YORK, Feb 8 (Reuters) - The dollar was flat to slightly lower on Monday in choppy trading, holding its ground against a basket of major currencies after falling sharply on worse-than-expected U.S. jobs data last week, as investors continued to price in faster U.S. recovery than most countries.
The dollar index was at 90.982, <=USD>, flat on the day. On Friday, it fell as low as 90.981 after data showed the U.S. economy created fewer jobs than expected in January and job losses in December were greater than initially reported.
"We view Friday's non-farm payrolls report as a speed bump rather than a roadblock for the emerging growth divergence narrative," said Mark McCormick, global head of FX strategy at TD Securities in Toronto, in a research note.
"Stepping back from this single report, we still see growth expectations moving in the U.S.'s favor, especially versus Europe. Since the end of the first lockdowns last year, the U.S., Japan, and Canada are the lone G10 countries to have seen growth expectations rise for next year," he added.
Speculators have been reducing short positions - bets the dollar will weaken - on the currency. Some analysts have flagged the likelihood that the same speculators will be forced out of their short positions by a rise in the dollar.
Net bearish bets on the dollar by speculators fell to $29.95 billion for the week ended Feb. 2, compared with a net short position of $33.81 billion for the previous week, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data. (Full Story)
Francesco Pesole, FX strategist at ING said, that even if the U.S. dollar recovery stalls, "we could continue to see evidence of a USD short squeeze in the coming weeks".
The euro was modestly up at $1.2057 against the dollar EUR=EBS.
In a note to clients, J.P. Morgan strategists said they "have growing confidence of underperformance of EUR vs USD".
Investor morale in the euro zone unexpectedly fell in February as lockdowns to suppress the COVID-19 caseload left their mark on the economy, which lost touch with other regions in the world as they recovered further, a survey by Sentix showed.
Sentix's investor sentiment index for the euro zone fell back into negative territory, dropping to -0.2 from 1.3 in January. A Reuters poll had pointed to a reading of 1.9. (Full Story)
The British pound GBP=D3 bought $1.3686, 0.3% lower to the dollar.
The dollar was quoted at 105.62 yen JPY=EBS, having pulled back from a three-month high reached on Friday.
In the cryptocurrency market, bitcoin BTC=BTSP hit another record high of $44,899 after Tesla Inc TSLA.O said on Monday it had invested around $1.5 billion in the virtual currency and expects to begin accepting payment for its cars and other products with it in the near future. (Full Story).
Bitcoin was last up 12.7% at 43,736.
Ethereum ETH=BTSP hit a fresh record high of $1,764.55 after the listing of ethereum futures on the Chicago Mercantile Exchange late Sunday. (Full Story) It was last up 6% at $1,712.52.
Brent hits $60 as supply cuts and stimulus hopes boost prices - Reuters News
- Weak dollar also supports prices of commodities
- 6-month Brent spread widest in over a year
- U.S. oil rig count highest since May last week - Baker Hughes
By Bozorgmehr Sharafedin
LONDON, Feb 8 (Reuters) - Oil prices rose on Monday to their highest in just over a year, with Brent nudging past $60 a barrel, boosted by supply cuts among key producers and hopes for further U.S. economic stimulus measures that can boost demand.
Brent LCOc1 was up 68 cents, or 1.2%, at $60.02 a barrel by 1442 GMT, while U.S. West Texas Intermediate CLc1 rose 68 cents, or 1.2%, to $57.53 a barrel.
"Managing to breach $60 again feels like the market is finally resurfacing after the long struggle and (taking) a proper breath," said Rystad Energy’s vice president for oil markets Paola Rodriguez Masiu. "It offers a feeling of normality again."
Both contracts were at their highest levels since January 2020.
"Oil prices are back close to pre-pandemic levels," said Norbert Rucker, analyst at Swiss bank Julius Baer.
"Support seems robust and the narrative sees the oil market swiftly burning through the remaining crisis-surplus, potentially running into tightness later this year," he added.
The oil market continues to tighten, with Saudi Arabia pledging extra supply cuts in February and March following reductions by other members of the Organization of the Petroleum Exporting Countries and its allies. (Full Story)
In a sign that prompt supplies are tightening, the six-month Brent spread LCOc1-LCOc7 hit a high of $2.54 on Monday, its widest since January last year.
OCBC economist Howie Lee said the world's top exporter Saudi Arabia sent a "very bullish signal" last week when it kept monthly crude prices to Asia unchanged despite expectations for small cuts. CRU/OSP
"I don't think anybody dares to short the market when Saudi is like this," he added.
A weaker dollar against most currencies on Monday also supported commodities, with dollar-denominated assets becoming more affordable to holders of other currencies. (Full Story)
Investors are also keeping a close watch on a $1.9 trillion COVID-19 aid package for the United States that is expected to be passed by lawmakers as soon as this month. (Full Story)
Hopes that Iranian oil exports would soon return to the market have been dampened, supporting oil prices.
U.S. President Joe Biden said the United States would not lift sanctions on Iran simply to get it back to the negotiating table, while Iran's Supreme Leader Ayatollah Ali Khamenei said all sanctions should be lifted first. (Full Story)
Stronger crude prices are meanwhile encouraging U.S. producers to increase output.
The U.S. oil rig count, an early indicator of future output, rose last week to its highest since May, according to energy services firm Baker Hughes Co.
Euro zone investor morale slips on lockdown, vaccine rollout woes - Reuters News
BERLIN, Feb 8 (Reuters) - Investor morale in the euro zone unexpectedly fell in February as lockdowns to suppress the COVID-19 case load left their mark on the economy, which lost touch with other regions in the world as they recovered further, a survey showed on Monday.
Sentix's index for the euro zone fell back into negative territory, dropping to -0.2 from 1.3 in January. A Reuters poll had pointed to a reading of 1.9.
An expectations index eased to 31.5 from an all-time high of 33.5 in January while the current situation index came in at -27.5, down from -26.5 in January.
"The lockdowns in many European countries are leaving their mark," Sentix said in a statement, adding that the broader European Union was being held back by its slow COVID-19 vaccination rollout.
"As a result, the EU economy is losing touch with the other regions of the world, which are continuing their recovery course in the month of February," it said, pointing to strength in the United States in particular.
Sentix surveyed 1,252 investors from Feb. 4 to Feb. 6.
Chinese demand helps German manufacturers weather COVID-19 pandemic - Reuters News
- Industrial output stagnates after seven monthly increases
- Demand from China helps manufacturers weather pandemic
- Temporary cut in sales tax, Brexit jitters also at play
By Michael Nienaber
BERLIN, Feb 8 (Reuters) - Germany's industrial sector avoided a contraction in December despite coronavirus lockdowns at home and abroad as strong demand from China helped export-oriented manufacturers in Europe's largest economy weather the COVID-19 pandemic.
Industrial output was flat on the month after an upwardly revised increase of 1.5% in the previous month, figures released by the Federal Statistics Office showed. A Reuters poll had forecast an increase of 0.3%.
This was the first stagnation following seven consecutive months of expansions.
The main drag came from construction where output fell by 3.2%. Looking at core manufacturing alone, output rose by 0.9% on the month. (Full Story)
The upwardly revised November figure helped overall industrial output in the fourth quarter to increase by 6.1% on the quarter.
"The German manufacturing sector has performed relatively well in recent months and that's mainly thanks to the well-running Chinese economy," VP Bank economist Thomas Gitzel said.
"If production in China is humming, local production is also humming here," Gitzel said, adding that the German automobile industry with its premium cars was benefiting in particular from the good income situation in China. (Full Story)
DekaBank analyst Andreas Scheuerle also pointed to positive one-off factors in December related to the expiration of a temporary sales tax cut in January and British clients stocking up supplies in preparation for a possible no-deal Brexit.
OUTLOOK CLOUDED
In 2020 as a whole, production in the manufacturing sector tumbled by a calendar-adjusted 8.5% on the year, in further proof of the wider economic devastation caused by the pandemic.
The economy ministry said the outlook for the industrial sector remained subdued given further development of the pandemic and supply bottlenecks in the semiconductor industry. A drop in industrial orders and a decline in business morale were clouding the outlook further, it added.
Data last week showed that orders for German-made goods fell more than expected in December, ending a seven-month streak of positive data as restrictions to contain the coronavirus dragged down demand from other euro zone countries. (Full Story)
This followed a survey by the Ifo economic institute which showed that German business morale slumped to a six-month low in January as a second wave of COVID-19 halted a recovery in the economy. (Full Story)
The Ifo institute expects the German economy to stagnate in the first quarter while the Commerzbank predicts a decline.
The German government last month slashed its GDP growth forecast to 3% this year, a sharp revision from last autumn's estimate of 4.4%. This means the economy probably won't reach its pre-pandemic level before mid-2022.
