dglobalnews.com Dollar slides, yields rise as investors digest Fed
Published: Sat, March 18, 2017
Markets | By Armando Jensen

Dollar slides, yields rise as investors digest Fed

Dollar slides, yields rise as investors digest Fed

Gold rallied for the second straight session on Thursday, climbing to its highest level in over a week after the US central bank signalled only gradual rate tightening and the dollar slid to its lowest in five weeks.

European stocks sagged Tuesday, on track for their first loss in four sessions, as investors stepped back before this week's Dutch election, the Federal Reserve meeting and while the United Kingdom moves closer to calling the start of the Brexit process.

The Fed is widely expected to increase interest rates (http://www.marketwatch.com/story/fed-may-not-pull-any-punches-in-policy-statement-2017-03-13) late Wednesday. "The fact that the Fed raised rates, but not aggressively, but yet indicated that she had confidence in the economy certainly was a big help".

With the Fed policy meeting out of the way, investors are now focused on the G20 financial leaders in Baden Baden starting later on Friday.

MSCI's all-country world stock index gained 0.7 percent, and hit an all-time high.

"At the moment, the dollar remains in correction mode, which we had fully expected", said Fawad Razaqzada, market analyst, Forex.com in London.

"How much further support the euro can garner would depend on how the Dutch vote could now impact the French presidential elections, for example by eroding support for (Marine) Le Pen". The 0.6 percent gain beat expectations for a 0.2 percent decline, while sales volumes were also solid, rising 0.7 percent.

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The pound remained broadly supported after the Bank of England held interest rates at record lows on Thursday, but the meeting minutes showed the monetary policy committee was split on the decision. "The rate hike was priced in and we got it". Platinum was up 0.8 percent at $939.60 while palladium added 0.2 percent to reach $745.50. "They haven't had balance sheet strength, in fact they haven't managed to have loan loss provisions that USA banks did early on in the cycle", Jonathan Bell, Chief Investment Officer at Stanhope Capital, told CNBC Wednesday.

Elsewhere, GBP/USD rose 0.25% to 1.2389, off Wednesday's two-week peak of 1.2309. "The reason for the rates rally in the aftermath was the 5-10 year inflation print which fell to a record low of 2.2 percent, which was the lowest level since the survey started in 1979", said Aaron Kohli, an interest rate strategist at BMO Capital Markets in NY, in a research note.

Prices on benchmark 10-year Treasuries rose 17/32 to yield 2.533 percent, from 2.595 percent late on Tuesday.

Gold futures also traded slightly higher, and were on track for a weekly gain of more than 2%.

Meanwhile, Brent crude lost 0.43% to $51.59 a barrel and West Texas Intermediate was 0.47% lower at $48.63.

It slid more than 1 percent the previous day to touch 100.490, its lowest since February 17.

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