Dollar Tumbles as Yen, Euro Rally; Stocks Steady: Markets Wrap
The dollar tumbled to its weakest level since the start of 2015 as fading expectations of U.S. interest-rate increases, North Korea tensions and a historically powerful hurricane unsettled investors. The euro was near the highest since January 2015 after the European Central Bank stopped short of attempting to jawbone it lower. Stocks in Asia were mixed.
The dollars decline deepened during Asian trading on Friday as the yen extended gains after hitting its strongest since November on Thursday and investors girded for potential economic damage to Florida from the historically powerful Hurricane Irma. The Australian dollar surged to the highest in more than two years. Asian equities from Tokyo to Sydney fluctuated. Ten-year Treasury yields fell toward 2 percent. Gold headed for a third week of gains ahead of a potential North Korean missile launch.
ECB President Mario Draghi cautioned on the common currencys strength though didnt expand on any action to address it. He said hes watching the euros gains as policy makers edge toward settling the future of their bond-buying program. The euros surge -- more than 14 percent against the dollar this year -- was reflected in a downgrade to the ECBs inflation outlook, though Draghi said economic growth remains solid.
Federal Reserve Bank of New York President William Dudley was the latest U.S. central banker to lay out his views ahead of a policy-setting meeting later this month as expectations for an interest-rate increase have been scaled back. Dudley reiterated the need to continue raising rates while conceding that the Fed may have to rethink its inflation model.
Meanwhile, the threat from North Korea lingers. U.S. President Donald Trump said its not inevitable that the U.S. will wind up in a war with North Korea over its continued development of nuclear weapons, though military action remains an option. Pyongyang may test a missile this weekend to coincide with its founding day on Sept. 9.
The key events this week:
Japan revised down its second-quarter economic growth to an annualized 2.5 percent from 4 percent, weaker than expectations for a revision to 2.9 percent. Australias home-loan approvals rose 2.9 percent in July, beating estimates. Chinas export growth slowed in August from a year earlier, while the trade surplus came it at $42 billion. Chinas forex reserves climbed $11 billion to $3.09 trillion in August, a seventh gain in a row as the yuan rose, the PBOC said Thursday. Also due in Asia are Taiwan exports. Malaysias central bank held its main rate at 3 percent Thursday as expected. U.S. jobless claims surged last week by the most since November 2012 because of benefit claims from Hurricane Harvey. They increased to 298,000 versus an estimate of 245,000. The White House is considering at least six candidates to succeed Janet Yellen as the next Fed chair, people familiar with the matter said.
And here are the main moves in markets: Stocks
The Topix index was little changed as of 2:17 p.m. in Tokyo, while South Koreas Kospi index fell 0.2 percent and Australias main gauge was 0.4 percent lower. The Hang Seng Index advanced 0.6 percent in Hong Kong. Gauges on Chinese markets were also higher. Contracts on the S&P 500 Index lost 0.2 percent after the underlying benchmark closed little changed on Thursday. The Nasdaq Composite Index and Dow Jones Industrial Average also barely budged. The MSCI Asia Pacific Index climbed 0.5 percent to the highest since December 2007.
The Japanese yen rose 0.6 percent to 107.82 per dollar. The euro increased 0.5 percent to $1.2080 and the Swiss franc advanced 0.5 percent to 0.9460 per dollar. The Australian dollar jumped 0.8 percent to 81 U.S. cents. The Bloomberg Dollar Spot Index fell for a seventh day, down 0.5 percent.
Yields on 10-year Treasuries were at 2.02 percent, after falling more than six basis points Thursday. The Australian 10-year bond yield slumped about eight basis points to 2.56 percent.
Gold rose to $1,355.89 an ounce and touched its highest in a year. It advanced 1.1 percent on Thursday. West Texas Intermediate crude was steady at $49.23 a barrel.