Forex - Dollar holds onto modest gains, but remains near 5-week trough

A rally fuelled by the Federal Reserve's announcement on interest rates has faded
A rally fuelled by the Federal Reserve's announcement on interest rates has faded
Author

19 March, 2017

Earlier, the pan-European STOXX 600 index gained 0.4 percent, helped by energy and basic resource stocks. It's trading about 2.4% higher on the week, which would be the highest such gain since the week ended February 3, according to FactSet data.

Shares of Tesla rose 2.8 per cent to US$262.94 (RM1,166) after the electric carmaker said it would raise about US$1.15 billion as the company speeds up the launch of its Model 3 sedan.

Dow Jones closed down by 0.09 percent, S&P 500 ended down by 0.18 percent, Nasdaq finished the day down by 0.03 percent.

"Momentum players will shift from equities to gold where there is momentum that is now strengthening", said Nichols.

"They are going to be very measured", said Nick Maroutsos, portfolio manager at Janus Capital Group, who believes it is too early to take a view on European interest rates.

The Fed on Wednesday lifted benchmark interest rates by a quarter-point as widely expected.

The central bank's rate increase was spurred by steady economic growth, strong job gains and confidence that inflation is rising to the central bank's target.

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At 5 p.m., the dollar stood at ¥113.23-23, down from ¥114.69-69 at the same time Wednesday.

MSCI's all-country world stock index.MIWD00000PUS, which hit an all-time high on Thursday, was little changed on Friday, on track to end the week 1.3 percent higher. Although there are lingering concerns about Trump's ability to implement his pro-business agenda, their enactment could cause the Fed to quicken its pace of rate increases-a negative for gold. Slightly more stocks rose than fell on the New York Stock Exchange.

The euro was also buoyed by a Dutch election defeat for far-right leader Geert Wilders which eased broader fears of a populist drift in European polls this year. It had plunged 0.11 of a percentage point Wednesday after the Federal Reserve dashed speculation that it may become more aggressive in raising rates.

With the steep drop, the ten-year yield continued to give back ground after reaching its highest closing level in well over two years on Monday.

Oil prices rebounded after the International Energy Agency said in its latest monthly report that OPEC crude producing nations were complying with a landmark deal to curb a global supply glut.

South Korea´s market climbed 0.6 percent, and even Japan´s Nikkei managed a slight rise despite the damage done to exporters by a firmer yen.

Oil prices slipped on Thursday, as support from a weaker dollar was offset by USA crude inventories near record high levels that again raised concerns whether OPEC-led output cuts were starting to drain a global glut. Energy stocks in the S&P 500 lost 0.9%, one of the biggest losses among the 11 sectors that make up the index.


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