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Jan 17, 2017

Bloomberg Markets Wrap: Dollar Drops on Trump Comments as May Boost Pound: Marke - January 16, 2017, 6:12 PM GMT-5 January 17, 2017, 8:59 AM GMT-5 :
Samuel Potter More stories by Samuel Potter

  • President-elect said the U.S. currency is already ‘too strong’
  • Pound surges after U.K. PM pledges parliamantary Brexit vote

Politics dominated global markets as the dollar weakened after the President-elect called the U.S. currency “too strong” and the pound rallied on British Prime Minister Theresa May’s plans to leave the European Union. Bonds advanced with gold.

The greenback fell against most peers after Donald Trump told the Wall Street Journal its value is too high in part because China holds down its own currency. Sterling headed for its biggest gain against the dollar since the global financial crisis and the Bloomberg Commodity Index rose to the highest since July on a closing basis. U.S. stock futures retreated, while European stocks recouped earlier losses.

“The dollar is the guiding light at this point, and all eyes are on the shape U.S. policy will take,” said Fredrik Nerbrand, global head of asset allocation at HSBC Holdings Plc in London. “I would put today’s dollar weakness down to noise rather than a structural shift. If Trump wants to become as growth-generative as he’s planning to be and you don’t have the same fiscal push coming from the rest of the world, then it’s a question of where does the capital flow to. The dollar is the tallest pygmy.”
There’s no end in sight to the impact of Brexit and Trump, twin themes which have dominated markets this year and last. Traders are puzzling over the meaning of the President-elect’s comment ahead of his inauguration Friday, while May’s confirmation that parliament will get a vote on the final Brexit deal added to the pound’s momentum against the greenback.
Read more from our Markets Live blog here.
  • The Bloomberg Dollar Spot Index retreated 1 percent as of 8:52 a.m. in New York to the lowest in a month. 
  • The pound surged 2.4 percent to $1.2332 as it headed for the biggest increase since June 2016.
  • The yen traded at 113.32 per dollar, up 0.8 percent. The currency has strengthened 3.2 percent over seven sessions. 
  • Futures on the S&P 500 Index slid 0.4 percent while the Stoxx Europe 600 index was little changed after clawing back losses of as much as 0.7 percent.
  • The yield on 10-year Treasuries dropped six basis points to 2.34 percent, after falling two basis points last week. The securities were shut worldwide on Monday for Martin Luther King Day.
  • European bonds rose, with the 10-year bund yield narrowing two basis points to 0.3 percent.
  • Gold climbed 0.9 percent to $1,213.34 per ounce, extending its winning streak to seven days, the longest since November.
  • Crude oil added 1.4 percent to $53.10 a barrel. 
  • Bloomberg’s commodity index rose for a fifth day, heading to the highest close since July 1.