Slower U.S. job growth expected, but the pace of gains probably remains enough to keep the economy expanding moderately. Rising threats from trade tensions and weakness overseas have left financial markets fearing a recession.
Οn Friday China’s central bank cut the amount of cash that banks must hold as reserves. The People’s Bank of China said it was cutting banks’ reserve requirements for the third time this year. This sent a ripple of optimism through currency markets, though analysts questioned how much stimulus global central banks have left.
Appetite for riskier assets received a further boost after China unveiled its latest round of policy easing. It had already firmed in early London trading thanks to strong data out of the United States.
The dollar steadied against its rivals. The greenback was heading for its biggest weekly drop in a month, as markets still expect the Federal Reserve will cut U.S. interest rates this month. But, the U.S. non-farm payrolls report on Friday is stronger than expected.
Μarkets also expect the European Central Bank to unveil more stimulus next week. The ECB is leaning toward a package that includes a rate cut, a beefed-up pledge to keep rates low for longer and compensation for banks over the side-effects of negative rates.
START TRADINGForex – U.S. job growth likely slowed further in August
The improvement in investors’ appetite for risk reduced demand for safe havens such as the yen. Riskier currencies including the Australian dollar surged.
The dollar index slipped 0.1% to 98.32 and was down 0.54% so far this week, its biggest weekly drop since early August.
The yen slipped to a three-week low of 106.75 against the dollar. The yen was last down 0.1% at 106.555, though overall the Japanese yen had been rising this year.
The Australian dollar, – a proxy with the Chinese economy – gained 0.3% to $0.6837 and strengthened 0.7% versus the Swiss franc.
The New Zealand dollar rose to a nine-day high of $0.6385.
The British pound edged lower on Friday after a tumultuous week in which it plunged to three-year lows before rebounding strongly as lawmakers voted to block a no-deal Brexit, making a snap election more likely. Sterling fell 0.2% against the dollar to $1.2305, but it is still far above the sub-$1.20 three-year lows hit on Monday. It has gained more than 1% this week – putting it on track for its best weekly performance since June. Against the euro the pound dropped 0.3% to 89.76 pence, leaving the British currency close to its strongest level since July 25.
Oil prices fell on Friday as U.S.-China trade tensions continued to weigh on sentiment despite recent diplomatic progress. Brent crude was down 45 cents, or 0.7%, at $60.50 a barrel by 1025 GMT. U.S. WTI crude was down 49 cents, or 0.9%, at $55.81.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money