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The dollar traded just off nine-week lows on Thursday as a doggedly dovish outlook from the U.S. Federal Reserve and bold spending plans from the White House gave a green light for the global reflation trade.

President Joe Biden’s push for another $1.8 trillion in spending also risked expanding the U.S. budget and trade deficits, a perennial Achilles heel for the dollar.

Against a basket of currencies, the dollar clambered off a nine-week low at 90.645, and a long way from the rally peak of 93.439 hit at the end of March.

The euro made the most of the opportunity to hit its highest since late February at $1.2150, before steadying at $1.2121.

Fed Chairman Jerome Powell did the dollar no favours by quashing speculation about an early tapering of asset buying, saying employment was still far short of target.

Even the outperformance of the U.S. economy had a sting in the tail for the dollar as it sucked in imports and drove the trade deficit to record highs in March.

It could also temper any reaction to an upbeat U.S. GDP report for the first quarter due later on Thursday, where market forecasts are for annualised growth of a whopping 6.1%.

The closely-watched Atlanta Fed’s “GDP Now” estimate is that GDP expanded by 7.9%, suggesting considerable upside risk.

The dollar also shed much of the week’s gain against the yen, falling back to 108.55 from Wednesday’s top of 109.07. A holiday in Japan kept it contained in Asian hours, although the dollar reclaimed some ground and rose to 108.80 yen in early London deals.

· Treasury yields rise ahead of GDP, jobless claims data

U.S. Treasury yields rose on Thursday morning, ahead of the release of data measuring economic growth in the first quarter and the number of new jobless claims filed last week.

The yield on the benchmark 10-year Treasury note climbed to 1.65% at 4:15 a.m. ET. The yield on the 30-year Treasury bond rose to 2.318%. Yields move inversely to prices.

· Euro zone bond selloff pauses as Fed plays down taper talk

Euro zone government bond yields were anchored below two-month highs on Thursday after policymakers in the United States suggested they would keep the stimulus taps flowing for now even in the face of a growing economy and rising inflation.

The yields of high-grade euro zone bonds were a touch higher on Thursday, but still short of Wednesday’s highs. Germany’s 10-year bond yield, the benchmark for the bloc, was up half a basis point at -0.228%, having climbed to -0.203% in the previous session.

Mizuho believes this benchmark bond yield could be pushed to the -0.15% mark some time in the second quarter.

· USD/CNH risks a drop to 6.4410 – UOB

According to FX Strategists at UOB Group, USD/CNH could slip back to the 6.4410 level in the next weeks amidst the renewed downward momentum.

-US economy is expected to grow by 6.5% in the first quarter.

-Investors are likely to focus on FOMC meeting and PCE Price Index data.

In the final estimate of the Q4 GDP, “the increase in fourth-quarter GDP reflected both the continued economic recovery from the sharp declines earlier in the year and the ongoing impact of the COVID-19 pandemic, including new restrictions and closures that took effect in some areas of the United States,” the BEA noted. Since then, the US took additional steps to loosen restrictions and administered more than 200 million doses of coronavirus vaccines.

U.S. economic data on Thursday will give investors an update on the progress of the economic recovery. Initial jobless claims numbers will be released, with economists surveyed by Dow Jones expecting a print of 528,000. Pending home sales figures will also be released.

Data releases from Europe Thursday include German unemployment data for April; euro zone consumer confidence and economic sentiment data for April; and flash inflation data for Germany and Spain in April.

· Government money seen powering U.S. economy in first quarter

U.S. economic growth likely accelerated in the first quarter, fueled by massive government aid to households and businesses, charting the course for what is expected to be the strongest performance this year in nearly four decades.

The United States' economy is rebounding more quickly compared to its global rivals, thanks to two additional rounds of COVID-19 relief money from Washington as well as easing anxiety over the pandemic, which has boosted domestic demand and allowed services businesses like restaurants and bars to reopen.

Though the anticipated pick-up in gross domestic product last quarter would leave output just below its level at the end of 2019, the economy remains at least a couple of years away from fully recovering from the pandemic recession, which started in February 2020.

The Commerce Department will publish its snapshot of first-quarter GDP growth on Thursday at 8:30 a.m EDT (1230 GMT).

· Biden pleads for unity, warns of Chinese threat, in speech to Congress

President Joe Biden proposed a sweeping new $1.8 trillion plan in a speech to a joint session of Congress on Wednesday, pleading with Republican lawmakers to work with him on divisive issues and to meet the stiff competition posed by China.

Pushing a vision of more government investment funded by the wealthy, the Democratic president urged Republicans who have so far resolutely opposed him to help pass a wide array of contentious legislation from taxes to police reform to gun control and immigration.

Republicans largely sat silently during the speech while Democrats applauded as Biden spoke.

· Biden calls for the U.S. to become more competitive against a ‘deadly earnest’ China

U.S. President Joe Biden called for America to work together against competition from China, as tensions between the two nations simmer.

· ECB’s de Guindos sees inflation higher than 2% by end-2021

“Inflation could be higher than 2% at the end of the year,” the European Central Bank (ECB) Vice President Luis de Guindos said in a scheduled speech on Thursday.

Additional quotes

“Expects strong activity increase in 2H 2021.”

“Uncertainty remains very high.”

“Next year there will be new moderation in inflation.”

“Inflation increase due to temporary factors.”

“Better to err on side of prudence when comes to withdrawing stimulus.”

· Comparing vaccination rates

At least 188 countries and territories have started their vaccination rollouts. Different countries have different processes for approving vaccines, and not all countries have deals to obtain doses from manufacturers yet. As a result, countries and territories are at different stages of their vaccination campaigns.

· Germany's COVID-19 incidence falls to lowest in 2 weeks

· Spain's Reig Jofre new plant to produce J&J vaccine by end-Q2

Spanish pharmaceutical Reig Jofre (RJFE.MC) said on Thursday that its new plant in Barcelona will start producing the COVID-19 vaccine developed by U.S. company Johnson & Johnson (JNJ.N) by the end of the second quarter.

· Vaccinating more than anywhere else, China still needs to speed up

China became the country to have administered COVID-19 vaccinations to more people than any other this week, but health authorities will need to accelerate the rollout to meet a target to inoculate 40% of its population by the end of June.

· Vaccinated Hong Kong residents ready to party till 2am curfew as bars reopen

In Hong Kong's famed party zone Lan Kwai Fong, dormant bars and clubs are revving up to serve customers again, but only if they have had at least one vaccine shot - one of the few examples globally of offering greater freedom for the vaccinated.

Bar staff need to have gotten at least one coronavirus vaccine dose too, and patrons must register with a government mobile-tracking application as they enter.

· India could soon have its second domestically developed coronavirus vaccine even as a deadly second wave shows no signs of slowing down anytime soon.

Drugmaker Cadila Healthcare, also known as Zydus Cadila, is conducting phase three clinical trials on 28,000 people, including those above 75 and children between ages 12 and 18, for its DNA-based vaccine candidate.

He said the company expects efficacy data from the phase three trial to come out next month after which, it would seek emergency use authorization from the Indian drug regulator in mid-May.

· India's Covid-19 crisis is a problem for the world

There is a split scenario unfolding as the world battles the pandemic.

In countries like the United States and the United Kingdom, jubilant, newly-vaccinated people hug their loved ones after a long period of separation. In India, distraught families count their dead.

Sick people are being turned away from hospitals that have run out of beds and oxygen, as the number of new cases rises to record levels each day, creating a national crisis with global repercussions.

The more the virus spreads, the more chances it has to mutate and create variants that could eventually resist current vaccines, threatening to undermine other countries' progress in containing the pandemic, experts warn.

· Manila to maintain strict Covid-19 restrictions until mid-May

Strict travel and public health restrictions will remain in metro Manila and surrounding areas until mid-May, Philippines President Rodrigo Duterte announced Wednesday.

· EXCLUSIVE China readies Tencent penalty in antitrust crackdown- sources

China is preparing a substantial fine for Tencent Holdings (0700.HK) as part of its sweeping antitrust clampdown on the country’s internet giants, but it is likely to be less than the record $2.75 billion penalty imposed on Alibaba earlier this month, two people with direct knowledge of the matter said.

· China's capital probes cryptocurrency mining -sources

The Chinese capital city of Beijing is conducting a check on data centres involved in cryptocurrency mining to better understand their impact on energy consumption, according to sources and a document seen by Reuters.

The Beijing Municipal Bureau of Economy and Information Technology on Tuesday sent an “emergency notice” to the city’s data centre operators to report if they’re involved in bitcoin and other cryptocurrency mining businesses.

If so, they need to report the amount, and share, of power consumed by cryptocurrency mining, according to the notice.

· Australia wine exports to China crater 96% in December quarter as tariffs bite

Australian winemakers shipped just 12 million Australian dollars ($9 million) of wines to China in the December quarter, from AU$325 million a year earlier, industry figures showed.

· Oil prices extend gains, bullish demand outlook outweighs India concerns

Oil prices extended gains on Thursday after rising 1% the previous session, as bullish forecasts on recovering demand this summer outweighed concerns about the impact of rising COVID-19 cases in India, Japan and Brazil.

Brent crude for June rose 42 cents, or 0.6%, to $67.69 a barrel by 0622 GMT, while U.S. West Texas Intermediate crude for June was at $64.22 a barrel, up 36 cents, or 0.6%.

Reference: CNBC, Reuters, CNN