Euro, gold on a high as the dollar breaks down
Financial markets greeted Friday with a number of milestones as the euro celebrated a 21-month peak against an embattled dollar, while Asian equities paused short of a six-month top and gold neared its highest on record.
For once, currencies have dominated trading as a deal on a European Union recovery plan shot the euro to its highest since late 2018. The single currency was last standing tall at $1.1616 having climbed 1.7% for the week so far.
That was taken as a signal to sell the dollar, which was down 1.4% on the week against a basket of currencies at 94.612 and heading for its fifth straight weekly loss.
That took it under the March trough of 94.650 to reach depths not visited since late 2018.
“The USD bear case continues to sharpen with a break of the 94.65 March lows likely ushering in the next leg down,” said Westpac analyst Richard Franulovich.
“Europe has reached a major milestone in its fiscal arrangements, the Recovery Fund amounting to a European Treasury that will fund EU expenditure via capital market borrowing.”
He noted the dollar faced a major hurdle next week when a Federal Reserve policy meeting was likely to take a very dovish lean as the spread of the coronavirus threatened recovery.
In the equity markets, MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.2%, but was still up 1.8% for the week and near its highest since mid-January.
Tokyo was closed for a holiday, but Nikkei futures were trading a fraction firmer. Chinese blue chips dipped 1.1% as Beijing vowed to retaliate against a U.S. order to close one of its consulates.
E-Mini futures for the S&P 500 edged up 0.27%,
The market’s dogged optimism on economic recovery had been challenged somewhat by data showing the number of Americans filing for unemployment benefits unexpectedly rose last week for the first time in nearly four months.
Analysts said there were some technical reasons for the surprise but noted claims were still more than double their worst weekly levels seen during the global financial crisis.
It came as U.S. law makers struggled to agree on a new round of stimulus measures ahead of the expiry of desperately needed unemployment benefits.
All of which was enough to see the Dow end Thursday down 1.31%, while the S&P 500 shed 1.23% and the Nasdaq 2.29%.
The high-flying tech sector lost some altitude after a tech watchdog group reported that Apple Inc faces consumer protection investigations in multiple states.