* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
(Updates prices, adds commentary and chart)
By Elizabeth Howcroft
LONDON, March 25 (Reuters) - The dollar hovered near a
four-month high against the euro on Thursday as market
participants weighed up the divergent recovery outlooks for the
United States and Europe, and risk appetite in equities waned.
Global stock markets were at their lowest in two weeks
during early European trading, after Chinese technology shares
sold off due to concerns that they would be de-listed from
American stock exchanges. Concerns about extended lockdowns in Europe also weighed on
markets. German Chancellor Angela Merkel's decision to ditch
plans for a lockdown over Easter did little to improve
sentiment. But Wall Street futures were up, ahead of data that is
expected to show a drop in weekly jobless claims. At 1213 GMT, the dollar index was up less than 0.1% on the
day, at 92.641, having hit its highest since November 2020, at
92.697, overnight =USD .
The Australian and New Zealand dollars, which dropped in the
previous two sessions, edged back up slightly against the U.S.
dollar AUD=D3 NZD=D3 , but both were only up by around 0.1%
on the day overall.
On Wednesday, U.S. Treasury Secretary Janet Yellen and
Federal Reserve Chair Jerome Powell expressed their confidence
in the U.S. recovery during a second day of testimony to
Congress. "We think that market pricing for the U.S. economic outlook
for this year is leaving a very high threshold to be achieved,"
said Simon Harvey, FX analyst at Monex Europe.
"The emphasis is very much on U.S. economic data to meet or
exceed these high expectations the market has given it, and we
think that's another downside risk for the dollar.”
INVESTORS
The euro was down 0.1% against the dollar, at $1.1807
EUR=EBS .
Stephen Gallo, European head of FX strategy at BMO Capital
Markets, wrote in a note to clients that he expected the euro to
fall to $1.16 over the next one month.
"The EU's 'third COVID wave', the relatively low vaccine
take up rate, and a more subdued fiscal impulse will probably
cause the Eurozone's recovery to lag North America's by 2-3
months," Gallo wrote. "The ECB's desire to cap yields is
evidence that even a moderate re-pricing of European sovereign
debt is a source of systemic risk," he added.
Gallo also said that the handling of the vaccine rollout in
Europe and "resultant forms of protectionism" could permanently
deter investors.
European leaders meet on Thursday and will discuss vaccine
supplies. The EU on Wednesday tightened its oversight of coronavirus
vaccine exports, giving it greater scope to block shipments to
countries with higher inoculation rates such as Britain.
The Swiss National Bank kept its ultra expansive monetary
policy in place, including the world's lowest interest rate,
saying that the Swiss franc remains "highly valued".
"The fact that the Swiss banks' sight deposits have been
reasonably stable since the autumn suggests that the central
bank has largely withdrawn from the FX market," wrote
Commerzbank strategist Thu Lan Nguyen.
However, Nguyen said that she would not rule out the
possibility of further SNB interventions in the FX market to
limit possible future franc appreciation.
At 1229 GMT, the franc was steady versus the euro, with the
pair changing hands at 1.10485 EURCHF=EBS .
Elsewhere, bitcoin extended recent losses, down 2.7% at
$50,812.49 BTC=BTSP .
The cryptocurrency briefly topped $57,000 in the previous
session after Tesla Inc TSLA.O boss Elon Musk said customers
can now buy the company's electric cars with the digital token.
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