Lingering disappointment that central banks merely affirmed their monetary support this week but no plans for new stimulus, kept investors wary.
The Fed promised to keep rates low for a long time but gave no new hints about any further monetary support. The Bank of England and the Bank of Japan sounded more open to further stimulus on Thursday but also took no action.
At its meeting, the Bank of Japan maintained its -0.1% short-term interest rate target and a pledge to cap 10-year bond yields around zero, as widely expected.
Financial leaders from China, Japan, South Korea, and Southeast Asia vowed to redouble their efforts to help the region’s economies recover. But, again, no plans for stimulus were announced.
The Reserve Bank of New Zealand meets next week. The governor has said that the policy rate will stay at 0.25% until next March.
Around 5 million British jobs remained fully or partly on furlough at the end of July, down from a peak of just under 9 million. At the same time, British shoppers spent more last month, taking sales further above pre-COVID levels. British retail sales now stand 4.0% higher than before the crisis. The sector has enjoyed a faster rebound than the rest of the economy, helped by strong online demand.
However, the outlook for the pound remains bleak. But the prospect of a chaotic end to the Brexit transition period in December if Britain fails to agree a trade deal with the European Union continues to overhang sterling.
The European Union’s Brexit negotiator said he thinks a Brexit trade deal with Britain is still possible.
START TRADINGForex – No plans for new stimulus keep investors wary
U.S. consumer confidence data is due later on Friday. Figures on Thursday showed the recovery in the U.S. labour market is stalling.
The US dollar was back to near the bottom of its recent range following its brief journey higher after Fed meeting. The dollar extended overnight losses and was down 0.1%, set for a weekly loss. The dollar index was flat versus at 1049 GMT, set for a weekly loss of around 0.4%.
Shrugging off a dovish-sounding Bank of Japan, the Japanese yen gained versus the dollar, staying close to the seven-week high hit on Thursday, at 104.380.
The New Zealand dollar was one of the biggest movers, gaining overnight and hitting its highest in 1-1/2 years in early London trading. New Zealand’s finance minister sounded positive about the economy in television interviews.
The Australian dollar was flat versus the U.S. dollar, at 0.73100.
The euro fell slightly, to $1.18390, and was set for a small weekly loss.
The pound was a touch stronger at $1.2977 and 91.215 pence per euro. The British currency fell sharply on Thursday. The Bank of England said monetary policymakers had been briefed on how to implement negative rates but recovered later in the session.
The currency was flat versus the euro at 0.9131 at 1001 GMT.
In commodity markets, oil’s earlier rally, spurred in part by Saudi Arabia pressing allies to stick to output quotas, faded. Brent crude was flat at $40.97 a barrel, while U.S. oil futures were up 0.1% to $41.01 a barrel.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money