Global equities continued to make gains following Yellen’s dovish outlook on Tuesday, which boosted risk-on sentiment. The Dow Jones and the S&P 500 indices in the US both closed at a new high for 2016 on Wednesday, while in Europe, shares in London and Frankfurt rallied to end the day 1.6% higher. However, stocks in Asia were mixed on Thursday with Tokyo and Hong Kong giving up earlier gains.
The US dollar paused its three-day slide on Thursday to stand broadly higher against a basket of currencies. The greenback pulled away from yesterday’s 7-month low of 1.1364 against the euro as the single currency eased slightly to 1.1321 dollars in today’s Asian session. There was little reaction to disappointing German retail sales figures, which fell by 0.4% month-on-month in February and missed expectations for a 0.3% increase.
The pound also fell back and retreated from yesterday’s peak of 1.4458 dollars to around 1.4345 dollars in late Asian trading today. The dollar was steadier against the yen though and was last trading at around 112.40 yen.
The Australian and New Zealand dollars moved back from their 9-month highs against the greenback yesterday but both currencies look set to end the quarter with gains. The Aussie crossed above the 0.77 level yesterday for the first time since July 2015 and is up around 5% in the first three months of the year. This is likely to worry the Reserve Bank of Australia, which sees a weak currency as key to cushioning Australia’s economy from the slump in commodity prices.
The New Zealand dollar meanwhile has rallied almost 9% from its January low and broke above the 0.69 level yesterday for the first time since June 2015.
In commodities, crude oil prices went into reverse on Wednesday after initially rising from a weaker-than-expected change in US crude oil inventories. US oil futures plunged from $38.83 immediately after the data to trade just below $38 a barrel in late Asian session on Thursday.
Coming up later today, the final estimate of UK fourth quarter GDP data and Eurozone flash inflation figures will be the main data in the European session. In the US session, initial weekly jobless claims and the Chicago PMI out of the US will be eyed.
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