Published: Thu, March 14, 2019
Economy | By

USA dollar drops amid rising sterling

USA dollar drops amid rising sterling

Shares in Europe rose on investor optimism that British lawmakers would reject leaving the European Union without a deal.

USA producer prices barely edged higher in February, in the smallest annual increase since June 2017, the latest sign of benign inflation that supports the Federal Reserve's patient approach to future interest rate hikes. Treasury yields edged up as orders for business equipment increased in January by the most in six months as the producer price index rose less than forecast in February.

The U.S. dollar was softer on Wednesday after new inflation data bolstered the likelihood U.S. interest rates will not be raised anytime soon, while sterling rose ahead of a vote by Britain's parliament on a proposal that would rule out a "no deal" exit from the EU.

USA stocks rose on Wednesday, led by gains in healthcare shares, and Boeing shares edged upward even as the United States grounded the company's 737 MAX jets after a fatal crash in Ethiopia.

The grounding gives Boeing time to address any problems and not face another potential disaster, said Tim Ghriskey, chief investment strategist at Inverness Counsel in NY.

A trader shows US dollar notes at a currency exchange booth in Peshawar, Pakistan December 3, 2018. "It's the old mantra: don't fight the Fed".

Despite China's slowing growth, Asian markets have had an impressive rally this year, with the MSCI index climbing about 10 percent largely after the U.S. Federal Reserve all but abandoned its rate hike plans.

On Wall Street, the Dow Jones Industrial Average rose 155.29 points, or 0.61 percent, to 25,709.95. An inverted yield curve historically has been an indicator of recession.

European shares jumped on Wednesday as investors bet British lawmakers would vote to reject a disorderly no-deal Brexit, but underwhelming results from Inditex and Adidas kept gains limited. Domestic producer prices in the United States rose 1.9 percent on a year-over-year basis in February, the smallest annual increase since June 2017.

The dollar index fell 0.27 percent, with the euro up 0.23 percent to $1.1312.

U.S. Treasury yields rose on Wednesday after falling the previous session, as risk appetite improved and equity markets stabilized, with a poor 30-year bond auction further lifting rates.

The U.S. dollar bought 111.03 Japanese yen, lower than 111.27 Japanese yen of the previous session. Shares fell 3.0 percent.

Benchmark 10-year U.S. Treasury notes fell 3/32 in price to yield 2.6141 percent. "So some of these are just rebound after that", said Stan Shipley, fixed income strategist at Evercore ISI in NY. The price of oil, one of Canada's major exports, rose as USA crude inventories unexpectedly fell and an official forecast of crude oil supply growth from the world's top producer was revised lower.

Gold hit almost a two-week high as tepid USA economic data reinforced views the Fed would be patient on monetary policy.

Oil prices extended overnight gains with USA crude up 12 cents per barrel at $58.38 and Brent adding 22 cents to $67.77, boosted by OPEC-led supply cuts, US sanctions against Venezuela and Iran and an unexpected dip in USA crude oil stocks and production.

USA crude rose $1.08 to $57.95 per barrel and Brent added 51 cents to $67.18.

This story has not been edited by Firstpost staff and is generated by auto-feed.

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