<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Rae Wee; Editing by Jacqueline Wong and Gerry Doyle)
By Rae Wee
SINGAPORE, May 5 (Reuters) - The yen was close to its
first weekly gain in nearly a month on Friday, driven by
safe-haven demand as bank sector turmoil in the U.S. unfolds,
while the dollar fell as traders priced in more aggressive rate
cuts from the Federal Reserve.
The euro edged away from its recent one-year peak
and last stood at $1.1043, after the European Central Bank (ECB)
on Thursday slowed the pace of its interest rate increases with
a 25-basis-point rise, though the single currency was still
higher on the day against a sliding greenback.
Although ECB President Christine Lagarde signalled more
tightening to come, markets pared back their expectations on how
much further rates would rise. "Lagarde was hawkish in her press conference, but I think
financial markets didn't really buy her view on further rate
rises in coming months," said Carol Kong, a currency strategist
at Commonwealth Bank of Australia.
In the broader currency market, the yen was last
more than 0.2% higher at 133.96 per dollar, and was headed for a
weekly gain of over 1.5%, snapping three straight weeks of
losses.
"The Japanese yen has slowly gained back its appeal of safe
haven status, and has definitely been supported by concerns
about U.S. regional banks and the associated safe-haven demand,"
Kong said.
A deepening crisis across U.S. regional banks has kept
investors on tenterhooks, with pressure growing on U.S.
regulators to take more steps to shore up the sector.
Shares of PacWest Bancorp plunged on Thursday,
dragging other regional lenders down after the Los Angeles-based
bank's plan to explore strategic options heightened investor
fears.
Canada's Toronto-Dominion Bank Group the same day
also called off its $13.4 billion takeover of First Horizon Corp , in another sign of stress within the sector.
Traders have since priced in more aggressive rate cuts from
the Fed, with Fed funds futures implying a small chance that
cuts could come as soon as June and through to the end of the
year. That left the greenback broadly lower on Friday, with the
dollar index slipping 0.18% to 101.16.
The Aussie and the kiwi were among the
largest beneficiaries of the sliding dollar, each rising more
than 0.5% and touching multi-week highs.
Sterling gained 0.27% to $1.26085.
"For the Fed's June decision, inflation data and employment
indicators ... along with bank lending standards will be key to
watch. The debt ceiling negotiations are another important
risk," said Sonia Meskin, head of U.S. macro at BNY Mellon.
"We believe the Fed is unlikely to contemplate cutting rates
before 2024."
April's nonfarm payrolls report is due later on Friday, the
next major data point that will offer further clues on the Fed's
fight against inflation.
Data released earlier this week showed that the U.S.
services sector maintained a steady pace of growth in April,
suggesting that inflation remains sticky, while U.S. private
employers boosted hiring last month.
The Australian dollar was last up 0.62% at $0.6735,
after touching a two-week peak earlier in the session.
The kiwi scaled a one-month high of $0.6317.
The Reserve Bank of Australia, in a quarterly statement
on monetary policy on Friday, warned that risks to inflation
were on the upside given low productivity growth, rising energy
prices and a surge in rents as population growth outpaces all
expectations.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.