· The Australian dollar and its New Zealand counterpart led gains among major currencies on Friday as easing geopolitical tensions prompted investors to buy riskier currencies with relatively upbeat U.S. economic data this week also benefiting sentiment.
The greenback held firm against a broad basket of its rivals and is on track to post its best week in two months as the prospect of war in the Middle East ebbed as the United States and Iran backed away from further confrontation.
“Risk sentiment is back on thanks to easing geopolitical tensions and hopes of an interim trade deal between China and the U.S. as early as next week,” said Manuel Oliveri, a currency strategist at Credit Agricole in London.
The Aussie gained a third of a percent to $0.68755 though strength were curbed on rising bets of an interest rate cut as early as February due to weeks of bushfires that have cast a shadow over the broader economy.
The Kiwi dollar also edged up 0.2% to $0.6622.
Against a basket of its rivals, the greenback gained 0.6%, its biggest weekly rise since early November. It held firm at 97.44 on Friday.
Moves in other major currencies were modest on Friday, with traders focused on December job-market data due at 1330 GMT. The consensus forecast is for 164,000 extra jobs in December, following a bumper 266,000 added in November.
· The U.S. dollar, which has dominated currency market trading for the last two years, looks set to do so again in 2020, according to the latest Reuters poll of foreign exchange strategists.
About 60% of analysts in the Jan 6-9 Reuters poll who answered an additional question - 32 of 57 - said the dollar will continue to dominate the market either from six to 12 months or for more than a year.
· U.S. job growth likely slowed in December, but the pace of hiring probably remains more than enough to keep the longest economic expansion in history on track despite a deepening downturn in a manufacturing sector stung by trade disputes.
“The solid job growth at the end of 2019 set the stage for continued strength from the consumer in 2020, helping to keep the economy chugging along at a decent clip,” said Ben Ayers, senior economist at Nationwide in Columbus, Ohio.
Now, though, with a Phase 1 deal with China set to be signed next week, policymakers are more confident in the outlook and last month signaled borrowing costs could remain unchanged at least through this year. Economists are pegging growth at the end of last year around a 2.3% rate.
According to a Reuters survey of economists, nonfarm payrolls probably increased by 164,000 in December. Payrolls surged 266,000 in November, in part as 46,000 production workers at General Motors (GM.N) returned to work after a strike.
· U.S. President Donald Trump, who announced last month that the Phase 1 trade deal with China would be signed on Jan. 15, said on Thursday the agreement could be signed “shortly thereafter.”
In an interview with the ABC TV affiliate in Toledo, Ohio, Trump said: “We’re going to be signing on January 15th - I think it will be January 15th, but shortly thereafter, but I think January 15th - a big deal with China.”
The White House did not immediately respond to a request for clarification of Trump’s comments.
· The pound will react more to U.K. economic indicators than the twists and turns of Brexit in the first half of 2020, and will likely remain supported, according to currency strategists.
Analysts are suggesting, however, that the pound is unlikely to reattach itself to Brexit developments until later in the year when progress, or a lack thereof, becomes clear. In the meantime, economic data, fiscal and monetary policy will guide sterling.
Sterling received a sharp initial boost after Johnson’s ruling Conservative Party secured a huge majority in December’s general election, but profit-taking and realism over the difficulty of securing a 2020 trade agreement quickly sank in. The pound was back down at around $1.306 on Thursday afternoon.
In a note on Tuesday, Nomura FX Strategist Jordan Rochester projected that sterling would drift higher, and signaled a renewed long call on the pound versus the dollar towards $1.36.
· Oil prices dipped on Friday as the threat of war in the Middle East receded and investors switched their attention to rising U.S. crude oil and product inventories.
Brent crude LCOc1 fell 4 cents to $65.33 by 0732 GMT, and was heading for its first decline in six weeks, down nearly 5%.
WTI was down 8 cents at $59.48 and was also on track for its first weekly drop in six, falling nearly 6% from last Friday’s close.
Reference: Reuters, FX Street, CNBC
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