Tag Archives: U.S. Dollar

Roller-coaster first quarter ends with dollar down, global stocks flat

People walk through the lobby of the London Stock Exchange in London

By David Gaffen

NEW YORK (Reuters) – Equity markets worldwide fell for the first time in four days on Thursday, the final day of a roller-coaster first quarter that has hammered the dollar and the pound but helped gold and bonds to big gains.

March closed on a subdued note after a volatile quarter that saw investors vacillate between calm and panic. Oil prices, the source of much concern throughout the quarter, were a touch higher as investors looked for clarity over a possible agreement by major oil-producing nations to reduce supply.

The dollar hovered near seven-week lows against the euro. It has fallen this week on reduced expectations for near-term interest rate hikes from the Federal Reserve, particularly after comments from Fed Chair Janet Yellen.

U.S. oil futures edged lower, slipping in late trading to lose 0.4 percent to $38.15 a barrel, after another report of record U.S. stockpiles, while China was put on a downgrade warning by S&P.

This quarter “has all been about the three C’s: commodities, China and central banks,” said Aberdeen Asset Management investment committee member Kevin Daly.

When oil hit $27 a barrel in mid-January there were “pretty dark” predictions for the global economy, Daly said, but the rebound in crude, China and ECB stimulus and the Federal Reserve cooling rate hike expectations had all bolstered confidence.

Wall Street was sleepy one day ahead of key monthly labor market data. In the span of three months, the S&P 500 erased an 11 percent fall, one of its worst-ever starts to a year, and is now set to end the quarter with modest gains.

The S&P 500 dipped 0.2 percent to 2,059.74; it ended the quarter up about 0.8 percent.

Safe-haven gold has been the big winner of 2016 so far. It ticked up to $1,231 an ounce and has jumped a whopping 16 percent this quarter, its best run in nearly 30 years. [GOL/]

The euro rose to $1.1382 and the yen hovered at 112.53 to the greenback, leaving the six-currency dollar index on track for its biggest monthly fall since April 2015 and largest quarterly drop in five years.

Bond yields declined during the quarter as investors reduced expectations for rate increases from the Federal Reserve and central banks in Europe and Japan added to stimulus efforts. The U.S. Barclays Aggregate bond index has returned 2.78 percent in the first quarter.

European markets were hit, with shares down 1 percent on Thursday. Euro zone inflation data was muted, underscoring just why the European Central Bank is cranking up its stimulus efforts.

Sterling has also taken a pounding this year as concerns have grown about a potential British exit, or ‘Brexit’, from the European Union. It barely budged on Thursday but has seen its biggest quarterly tumble in 6-1/2 years against the euro.

This year’s turbulent start pushed MSCI’s benchmark emerging market equity index down 14 percent by the time it bottomed on Jan. 21.

But fast forward 2-1/2 months and EM stocks are up 20 percent. Currencies from the Russian rouble to the Brazilian real have surged and struggling parts of Africa have some of the best-performing bonds in the world.

Japan’s Nikkei sagged 0.7 percent on Thursday to an 11 percent quarterly loss, having been slammed by the 7-percent surge in the yen against the dollar.

Shanghai shares have been an even bigger loser, having dropped about 15 percent since the start of the year.

(Additional reporting by Marc Jones in London and A. Ananthalakshmi in Singapore; Editing by Nick Zieminski and James Dalgleish)

Dollar under pressure, on track for biggest quarterly fall in five years

One Dollar Bills

By Anirban Nag

LONDON (Reuters) – The U.S. dollar fell to its lowest level in five months against the euro on Thursday in trade dominated by month-end rebalancing flows, putting the dollar index on track for its worst quarterly performance in five years.

These flows are caused by global portfolio managers adjusting their existing currency hedges, with many banks taking the view that they could weigh on the dollar.

The dollar index <.DXY> was on track for its biggest monthly fall since April 2015 and its largest quarterly loss since March 2011, as dovish comments from Federal Reserve Chair Janet Yellen continued to resonate, prompting investors and speculators to cut favourable bets in the greenback.

The index was down 0.2 percent at 94.555 <.DXY>, a five-month low. The dollar was flat against the yen at 112.25 yen <JPY=>, while the euro was up 0.3 percent at $1.1383 <EUR=>, its highest since October 2015.

The common currency was on track to post a quarterly gain of 4.7 percent.

“Things have settled down a bit after those comments from Yellen, with the focus turning to the U.S. jobs data on Friday,” said Nordea FX strategist Niels Christensen.

“More than the employment numbers, what will be important are the average earnings, and if that misses expectations, then we could see the dollar come under more pressure,” Christensen added. “Yellen has left the dollar vulnerable to the downside.”

INFLATION SIGNS

U.S. nonfarm payrolls are expected to show the world’s largest economy added 205,000 jobs in March, with the jobless rate steady at 4.9 percent. Average earnings, seen as signalling inflation trends, are expected to rise by 0.2 percent. <ECONUS>

Despite signs of inflation picking up in the United States, Yellen said on Tuesday the Fed would proceed cautiously in raising rates and she highlighted external risks such as slower global growth.

Chicago Fed President Charles Evans on Wednesday underscored that caution, saying a “very shallow” series of rate hikes over the next few years is appropriate to buffer the economy from outside shocks and the risk of inflation slipping too low.

In the European session, the euro zone inflation showed some signs of improvement, but traders were cautious about pushing the euro too much higher, given the European Central Bank’s ultra-accommodative policy stance. <ECONEZ>

“The euro is likely to enter a period of range trading around the $1.10 level for the rest of the year,” said Petr Krpata, currency strategist at ING.

“The range-trading argument is based on fading effecting monetary divergence between the Fed and the ECB. The ECB seems to be reluctant to cut the depo rate further into negative territory while the Fed is unlikely to embark on an aggressive tightening cycle.”

(Additional reporting by Hideyuki Sano; Editing by Gareth Jones)

U.S. Dollar Lowest Level in 7 Weeks

An employee checks U.S. dollar bank-notes

By Sam Forgione

NEW YORK (Reuters) – The U.S. dollar hit its lowest level against the euro in nearly seven weeks on Wednesday following dovish comments from Federal Reserve Chair Janet Yellen that pushed out expectations for the central bank’s next interest rate hike.

The euro &lt;EUR=&gt; advanced to $1.1364, its highest against the dollar since Feb. 11, while the dollar hit a more than five-month low against the Swiss franc at 0.9592 franc &lt;CHF=&gt;.

The dollar index, which measures the currency against a basket of six major rivals, hit its lowest level in 12 days at 94.588 &lt;.DXY&gt; after posting its biggest one-day percentage decline since March 17 on Tuesday.

The ADP National Employment Report showed U.S. private employers added 200,000 jobs in March, above economists’ expectations. The data came ahead of the U.S. Labor Department’s more comprehensive March non-farm jobs report on Friday.

While the ADP data beat economists’ forecast for 194,000 jobs according to a Reuters poll, the data was not enough to halt the negative sentiment toward the dollar a day after Yellen stressed the need to be cautious in raising rates.

“It’s going to take more than one ADP number that was just okay to overcome Yellen’s dovish comments,” said Chris Gaffney, president of EverBank World Markets in St. Louis.

The dollar was on track to post its biggest quarterly percentage decline in five years, and was last down 4 percent for the first quarter.

The dollar’s losses accelerated against the euro after traders “covered” or reversed “short” bets against the euro once it crossed $1.1335, said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York.

The Australian dollar &lt;AUD=D4&gt;, which is closely correlated with commodity prices, soared to a roughly nine-month high &lt;AUD=D4&gt; of $0.7709 as oil prices – which are U.S. dollar-denominated – rose and became cheaper for holders of other currencies. &lt;O/R&gt;

U.S. crude was last up 2.8 percent at $39.36 a barrel &lt;LCOc1&gt;.

Against the yen, the dollar was last down 0.2 percent at 112.45 yen &lt;JPY=&gt; after touching an eight-day low of 112.02 yen earlier.

(The story was refiled to change the word in the analyst comment to “reversed” from “repurchased”, in the eigth paragraph)

(Reporting by Sam Forgione; Editing by Dan Grebler)

U.S. Dollar weakens after worse-than-expected consumer spending

Global Markets

NEW YORK (Reuters) – Wall Street shares rose in choppy trading as the dollar fell following weaker-than-expected U.S. economic data on Monday that cut expectations of a near-term interest rate increase by the Federal Reserve.

The dollar reversed earlier gains and moved lower after U.S. consumer spending data indicated a sluggish economy with weak first-quarter gross domestic product growth.

Monday’s worse-than-expected consumer spending, as well as a downward adjustment to January’s numbers and weak readings for personal income and inflation, cast doubt on the prospect of the Fed raising rates at either of its upcoming meetings in April and June.

The dollar had benefited last week from stronger-than-expected economic data and comments from some Fed officials indicating that policymakers think they could raise interest rates as early as next month.

“Because we had softer (personal consumption expenditures) data and also the big downward revision in spending in January, that is causing a lot of the (dollar) long trades that many have put on to be cut back,” said Kathy Lien, managing director at BK Asset Management in New York.

“Today’s report certainly raises the question of whether the Fed can pull the trigger in June.”

Higher interest rates increase the strength of the dollar by making it more attractive to investors, but a strong dollar can weigh on the returns of firms that do business overseas, hurting earnings.

The dollar index <.DXY> dipped 0.2 percent against a basket of six major currencies, falling to 95.950. It had risen to as much as 96.339 prior to the data, its highest in almost two weeks.

Following the data’s release on Monday, markets <0#FF:> are pricing in only about a 37 percent chance of a rate hike by the Fed in June, with only a 10 percent chance of an April increase factored in so far, according to CME Group’s FedWatch tool.

The weak dollar benefited U.S. stocks, which rose in afternoon trading, led by the materials and consumer discretionary sectors, as utilities and energy dragged.

With share markets in Europe closed, as well as those in Australia, New Zealand and Hong Kong for holidays following last week’s Good Friday holiday in the U.S., trading was generally light for much of the day.

The Dow Jones industrial average <.DJI> rose 34.86 points, or 0.2 percent, to 17,550.59, the S&P 500 <.SPX> gained 3.55 points, or 0.17 percent, to 2,039.49 and the Nasdaq Composite <.IXIC> added 2.06 points, or 0.04 percent, to 4,775.57.

MSCI’s measure of emerging markets stocks <.MSCIEF> rose by around 0.1 percent in thin trading. MSCI’s index of world shares <.MIWD00000PUS> gained 0.11 percent.

Bonds rose in price in the wake of the U.S. data, with yields on benchmark U.S. 10-year Treasuries falling to 1.8684 percent.

Oil prices, which have risen about 50 percent since multi-year lows hit in January, turned lower in thin trading.

U.S. crude futures <CLc1> fell 0.5 percent to $39.04 per barrel, and Brent <LCOc1> lost 0.8 percent to $40.11.

Fed Chair Janet Yellen and other Fed policymakers are expected to speak on Tuesday, making the U.S. central bank’s policy the main focus for now.

(Reporting by Dion Rabouin; Editing by Nick Zieminski and Alan Crosby)

Dollar turns lower against euro, yen on doubts over rally’s momentum

By Sam Forgione

NEW YORK (Reuters) – The U.S. dollar lost ground against the yen and was mostly flat against the euro on Wednesday, reversing earlier gains after traders took profits on skepticism that central bank policy in the United States and elsewhere would continue to diverge.

The dollar fell to a session low of 113.23 yen after hitting a more than two-week high against the Japanese currency of 114.55 yen early in the U.S. trading session. The euro was last up slightly against the dollar at $1.0866 after hitting a more than one-month low of $1.0826 earlier.

Early in the U.S. session, data showing stronger-than-expected growth in U.S. private payrolls in February added to a recent pile of reassuring U.S. economic data and boosted expectations that the Federal Reserve would hike interest rates at least once this year.

That optimism cooled, partly on doubts that uniformly strong U.S. economic data would continue and that the European Central Bank would announce a greater stimulus package and weaken the euro at the central bank’s meeting on March 10.

“People are taking a bit of a profit after a strong ride,” said Sebastien Galy, currency strategist at Deutsche Bank in New York, in reference to the dollar’s recent gains. “Everyone knows the dollar, for good reasons, is too expensive.”

The ADP National Employment Report showed U.S. private employers added 214,000 jobs in February. That was above economists’ expectations for a gain of 190,000, according to a Reuters poll.

Uncertainty remained over the impact of low oil prices on Fed policy and China’s economic growth, leading traders to take profits in the dollar’s gains, said Sireen Harajli, currency strategist at Mizuho Bank Ltd in New York.

Harajli said uncertainty ahead of Friday’s U.S. non-farm payrolls report for February may have contributed to the reversal in the dollar’s rally. Economists polled by Reuters expect U.S. employers to have added 190,000 jobs last month.

The U.S. dollar index, which hit a roughly one-month high of 98.582 earlier, was last down 0.17 percent at 98.176 <.DXY>. The dollar was last down 0.53 percent against the yen at 113.38 yen <JPY=>.

The dollar was last down 0.07 percent against the Swiss franc at 0.9962 franc <CHF=>.

(Reporting by Sam Forgione; Editing by Lisa Von Ahn)

World Markets React Wednesday To Shutdown

The U.S. government shutdown had an impact on world markets causing concerns the country’s fragile economic condition could be severely impacted by a prolonged closure.

Stock markets in Britain, Germany and France all fell in Wednesday’s trading. U.S. markets fell as well with the Dow Jones Industrial Average falling 0.6% and the S&P 500 falling 0.8%.

Investors are paying lip service to the U.S. shutdown but have expressed more serious concerns the shutdown will result in a delay of raising the U.S. debt ceiling that would have impact on the world markets.

The dollar also continued to fall across the world. The dollar took a hit from 98.62 yen to the dollar before the shutdown to a current level of 97.74. The dollar also fell further against all other Asian currencies.

Economic Worries Drive Pound Lower

The British pound has fallen against both the U.S. dollar and the Euro on fears that the economy is weaker than previously stated by analysts.

The pound fell to a seven month low against the dollar and a 15 month low against the Euro. A Bank of England policymaker is being pointed to as a source for the drop after stating the pound needed to weaken further to improve the economy. Continue reading →