Markets & Finance News

Indonesia's central bank kept its main policy rate at a record low on Tuesday as policymakers balanced the need to support the coronavirus-hit economy with concerns that further monetary easing could weigh on an already falling currency.

* Spot gold may slide into $1,744-$1,758/oz range - technicals (Recasts, adds chart, and updates prices)

Round-up of South Korean financial markets:

Deutsche Telekom has invested in Celo, a blockchain payments platform that allows mobile phone access to "decentralised finance" projects that allow users to bypass traditional financial firms, the company said on Tuesday.

Japanese shares fell on Tuesday by their most in a month, weighed down by worries that possible reintroduction of COVID-19 lockdowns in the country's biggest cities would slow the economic recovery.

Asian shares hit a six-and-a-half week top on Tuesday, shaking off an initial drag from tech-driven Wall Street losses, while the dollar stayed at multi-week lows against most other major currencies in a boost for commodities.

* Fund garners interest from Middle East sovereign wealth funds

China's yuan strengthened past a key threshold to the firmest in a month on Tuesday, underpinned by broad dollar weakness following a dip in U.S. bond yields. Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate at a near one-month high of 6.5103 per dollar, 130 pips or 0.2% firmer than the previous fix of 6.5233. In the spot market, onshore yuan opened at 6.5020 per dollar, rose past the psychologically important 6.5 per dollar level to a high of 6.4918, the strongest since March 18. By midday, it was changing hands at 6.4959, 151 pips firmer than the previous late session close. Its offshore counterpart also strengthened past the key level to trade at 6.491 per dollar at midday. Traders said the yuan's strength was reflecting broad dollar weakness, and was likely to consolidate around 6.5 per dollar. "We expect USD/CNY to enter a period of consolidation following the stabilisation of U.S. Treasury bond yields and the USD," Becky Liu, head of China macro strategy at Standard Chartered, said in a note. Liu added the yuan's fundamentals remained strong but its advantage over other developed economy currencies had narrowed. More channels for capital outflows and a pick-up in dividend payments could reduce inflows into China and limit upside potential for the Chinese currency in the near term. The bank revised down its yuan forecasts to 6.5/dollar at the end of Q2, 6.6 at end of Q3 and 6.58 at the year-end, compared with 6.3, 6.4, 6.45, respectively, in previous estimates. Investors continue to gauge U.S.-China policy divergence, pace of domestic vaccine rollouts, global economic trends and the yield gap between China and other major countries, for clues on the yuan's outlook. On Tuesday, the market took in stride no change to the benchmark lending rate for corporate and household loans. China kept the loan prime rate steady for the 12th straight month at its April fixing, matching market expectations. "With the economy doing well, policymakers are now focused on tackling financial risks. But political constraints mean that these efforts are unlikely to include policy rate hikes," said Julian Evans-Pritchard, senior China economist at Capital Economics, who does not expect any change to policy rates in the coming months. As of midday, the global dollar index fell to 90.904 from the previous close of 91.049. The yuan market at 0400 GMT: ONSHORE SPOT: Item Current Previous Change PBOC midpoint 6.5103 6.5233 0.20% Spot yuan 6.4959 6.511 0.23% Divergence from -0.22% midpoint* Spot change YTD 0.50% Spot change since 2005 27.41% revaluation Key indexes: Item Current Previous Change Thomson 96.51 96.53 0.0 Reuters/HKEX CNH index Dollar index 90.904 91.049 -0.2 *Divergence of the dollar/yuan exchange rate. Negative number indicates that spot yuan is trading stronger than the midpoint. The People's Bank of China (PBOC) allows the exchange rate to rise or fall 2% from official midpoint rate it sets each morning. OFFSHORE CNH MARKET Instrument Current Difference from onshore Offshore spot yuan 6.491 0.08% * Offshore 6.6705 -2.40% non-deliverable forwards ** *Premium for offshore spot over onshore **Figure reflects difference from PBOC's official midpoint, since non-deliverable forwards are settled against the midpoint. . (Reporting by Winni Zhou and Andrew Galbraith; Editing by Jacqueline Wong)

The Australian dollar hit its highest level in nearly five weeks on Tuesday after the central bank sounded upbeat on the country's economic recovery, while higher commodity prices also underpinned the currency.

The dollar sank to a fresh 6-1/2-week low against major peers on Tuesday as the euro led a rally on the back of a brightening outlook for the region's vaccination programme. The dollar had already been losing traction as U.S. bond yields retreated from a 14-month peak touched last month, reducing the greenback's yield allure. The euro rose as high as $1.20715 for the first time since March 3, while the British pound touched a fresh one-month high at $1.40090, building on a 1% jump overnight. Some analysts say support for the euro likely came from the announcement that the European Union has secured an additional 100 million doses of COVID-19 vaccine by BioNTech and Pfizer. "Europe is really the main region which is going to see accelerating vaccinations this quarter. And later in the year, we will see accelerating vaccinations, broadly, in emerging market economies," said Zach Pandl, co-head of foreign exchange strategy for Goldman Sachs in New York. "The U.S. got ahead of the curve in the first quarter, but other countries are going to be quickly catching up." The dollar index dropped as low as 90.877, the weakest since March 3, having lost some 2.7% from its five-month peak at 93.439 hit last month. The U.S. currency fell to as low as 107.975 yen, its weakest in more than six weeks. The moves are the reverse of what was happening in the first three months of the year, when the dollar gained against the very same major currencies as yields rose on U.S. Treasuries and offered higher returns on the greenback. At that time, bond investors bet that massive fiscal stimulus in the United States would spur faster inflation, leading to an earlier exit from the Federal Reserve's monetary easing programme. But repeated assurances from Fed policymakers this month that near-term price pressures will be transitory seem to have soothed markets. "I think that people are quite comfortable ... that the dollar is likely to be weaker structurally for longer," said Andrew Gillan, a portfolio manager at Janus Henderson Investors. "And I don't think we've seen enough evidence yet of that changing, even with a little bit of recent strength." The 10-year U.S. Treasuries yield hit a one-month low of 1.529% last week. Though it ticked up to 1.615% on Tuesday, it stood well below its March peak of 1.776%. "One of the probably most important developments in macro markets over the last month has been a stability in U.S. rates," said Goldman's Pandl. "That also opens up room for dollar weakness against a broad set of currencies." The Australian dollar rose as high as $0.7800 for the first time in a month after Reserve Bank of Australia policymakers said in minutes of their meeting this month that the country's economic recovery has surpassed all expectations, with an "above-trend" expansion likely this year and next. The offshore Chinese yuan firmed to as strong as 6.4885 per dollar, also a one-month high. In cryptocurrencies, bitcoin slipped to around $55,000 , on track for a fifth straight day of losses. It sank as low as $51,541.16 on Sunday, after hitting a record high of $64,895.22 just days earlier. Despite the retreat, the digital token has still almost doubled in value so far this year, after more than quadrupling in 2020. "The recent drop in price for BTC definitely damaged the technical picture: The old resistance level around $60,000 should have held up and catch the decline, but it did not," Julius de Kempenaer, senior technical analyst at Stockcharts.com, said by email. However, the "long-term trend for BTC -- and crypto in general -- seems unharmed." ======================================================== Currency bid prices at 501 GMT Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar $1.2064 $1.2036 +0.22% -1.27% +1.2072 +1.2038 Dollar/Yen 108.1450 108.1400 -0.03% +4.67% +108.3020 +107.9750 Euro/Yen <EURJPY=EB 130.47 130.14 +0.25% +2.80% +130.5500 +130.0700 S> Dollar/Swiss 0.9140 0.9153 -0.17% +3.28% +0.9156 +0.9138 Sterling/Dollar 1.4004 1.3989 +0.10% +2.50% +1.4007 +1.3977 Dollar/Canadian 1.2488 1.2531 -0.32% -1.91% +1.2529 +1.2490 Aussie/Dollar 0.7798 0.7755 +0.55% +1.36% +0.7799 +0.7755 NZ 0.7214 0.7180 +0.44% +0.42% +0.7218 +0.7180 Dollar/Dollar All spots Tokyo spots Europe spots Volatilities Tokyo Forex market info from BOJ (Reporting by Hideyuki Sano Editing by Shri Navaratnam)