Dollar set for weekly loss

A currency trader walks by a screen showing the Korea Composite Stock Price Index. AP Photo/Lee Jin-man

A currency trader walks by a screen showing the Korea Composite Stock Price Index. AP Photo/Lee Jin-man

Published Jan 13, 2017

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Sydney - The dollar headed for a weekly loss and gold

traded at the highest price in almost two months as investors continued to

assess whether market moves since the US election have gone too far. European

stocks and US equity futures climbed and Chinese shares fell after data on

exports.

The US currency fluctuated after touching the lowest

point in almost a month on Thursday. The Stoxx Euro 600 Index rebounded from

its biggest drop since the end of November as Federal Reserve Chair Janet

Yellen reiterated that the US economy is doing well. The Shanghai Composite

Index fell to its lowest level of the year as data showed China’s overseas

shipments remain subdued. Gold increased for a fifth day.

In a week characterised by a reversal in many of the

market moves seen since Donald Trump’s election, Friday will see the release of

a report on US holiday-season retail sales as well as earnings from Bank of

America, JPMorgan Chase & Company, and Wells Fargo & Company. Since

Trump’s victory, the dollar and global equities have rallied, while bonds sold

off amid expectations for improved US growth. Investors unwound some of those

wagers Thursday after the president-elect’s first press conference since the

November victory.

The lack of details from Trump “was probably more

concerning for markets as it highlights how markets have run ahead of

themselves.,” Savanth Sebastian, Sydney-based analyst at Commonwealth Bank of

Australia, said by phone. He added that while the domestic Chinese economy

still seems to be holding up reasonably well, the data “highlights the

risks to exports with the Trump administration going forward and

protectionist-style policies.”

The US economy is doing well, with inflation now pretty

close to the Fed’s 2 percent target,  Yellen said at a town hall meeting.

The central bank should begin discussing how to shrink its bloated balance

sheet this year, according to three regional Fed presidents who stepped up

pressure for a debate on when to unwind emergency-era measures that the Fed

preferred to postpone.

Stocks

The Stoxx Euro 600 Index climbed 0.5 percent at 8:21 a.m.

London time, rebounding from a 0.7 percent drop on Thursday.  Futures on

the S&P 500 Index added 0.1 percent after the gauge slid 0.2 percent on

Thursday.   Japan’s Topix index rose 0.6 percent, paring a weekly

decline. South Korea’s Kospi index lost 0.5 percent as the central bank

left its key interest rate at a record low.  The Shanghai Composite Index

slid 0.2 percent in a fourth day of losses, the longest run since October. Overseas

shipments dropped 6.1 percent from a year ago in December, China’s customs

administration said. Hong Kong’s Hang Seng added 0.5 percent. 

Currencies

The Bloomberg Dollar Spot Index, a gauge of the greenback

against 10 major peers, lost 0.1 percent after falling 0.5 percent on Thursday.

The gauge is down 0.7 percent for the week.  Turkey’s lira slipped 0.9

percent after surging 2.8 percent against the dollar on Thursday. The currency

is down 4.2 percent this week after touching the lowest point on record. The

central bank is implementing measures to force banks to borrow at a higher

rate, according to a person with direct knowledge of the matter. The offshore

yuan extended gains for a third day. China has asked some banks to stop

processing cross-border yuan payments until they balance inflows and outflows,

people familiar with the matter said, as authorities step up a campaign to curb

a record amount of money leaving the nation in the local currency. The yen

traded at 114.60, taking the week’s gain to 2.1 percent, the best performance

since the end of July.

Bonds 

The benchmark 10-year Treasury yield rose one basis point

to 2.36 percent, after touching the lowest level since Nov. 30 on Thursday. The

yield on Australia’s 10-year government notes added two basis points to 2.68

percent.

Commodities 

Oil held near $53 a barrel after its biggest two-day gain

in almost six weeks as Saudi Arabia said it cut output even more than required

by an OPEC deal. Gold added 0.1 percent to $1,196.7 an ounce after briefly

rising above $1,200 for the first time since November on Thursday.

BLOOMBERG

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