Dollar drops as aussie surges on RBA while China shares retreat
By Bloomberg
The dollar slipped from a 10-year high versus major peers, retreating the most in six weeks versus Australia’s currency after the central bank left rates unchanged. Chinese shares dropped from a five-week high, while oil traded near $50 a barrel in New York.
The Bloomberg Dollar Spot Index retreated 0.2 percent by 8:16 a.m. in London, as the Aussie strengthened 0.7 percent to 78.21 U.S. cents and the yen climbed. The Stoxx Europe 600 Index added 0.1 percent, while futures on the Standard & Poor’s 500 Index slipped 0.1 percent after the U.S. gauge hit a record. The Shanghai Composite Index slid 2.2 percent, retreating for the first time in four days. U.S. oil rose 0.7 percent to $49.94.
The U.S. currency has climbed against most peers this year as the Federal Reserve ponders the timing of interest-rate increases while the European Central Bank leads a wave of policy easing elsewhere that’s driving equities to new highs. The Reserve Bank of Australia held rates at a record-low 2.25 percent today, defying economist projections for a second cut in 2015. An annual policy-setting meeting of Chinese lawmakers gets under way this week.
“The U.S. dollar’s moderate weakness comes after a fairly sharp gain in the last couple of days,” said Mitul Kotecha, head of Asia-Pacific currency strategy at Barclays Plc in Singapore. “It’s just pausing for breath rather than turning around here.”
Dollar Gauge
The Bloomberg index that tracks the greenback versus 10 major counterparts slipped after jumping 0.4 percent on Monday to the highest in data going back to January 2005. The U.S. currency was weaker against 15 of 16 major peers today.
The Aussie rebounded from yesterday’s 0.5 percent loss while the S&P/ASX 200 Index of shares dropped 0.4 percent and the yield on government bonds due in a decade rose five basis points. The currency surged more than 0.6 percent in the minute before the central bank unexpectedly refrained from cutting interest rates, spurring speculation the decision was released early.
The Aussie advance boosted New Zealand’s dollar, with the kiwi adding 0.4 percent to 75.38 U.S. cents. Japan’s yen climbed 0.3 percent to 119.78 per dollar, while the euro was 0.1 percent higher at $1.1193.
Consumer and technology stocks have been leading 2015 gains in the S&P 500, with the Nasdaq Composite Index rising above 5,000 Monday for the first time in 15 years. The gauge now stands less than 1 percent below its bubble peak. At its current pace, the Nasdaq Composite is poised to rise for nine straight quarters, a feat it’s never accomplished.
Stoxx 600
Seventeen of the 19 industry groups on the Stoxx 600 advanced today. British American Tobacco Plc climbed 1.1 percent after bidding about $3.5 billion for the stake it doesn’t already own in Souza Cruz SA, Brazil’s biggest cigarette maker, taking advantage of a plunging real to expand in Latin America.
Hong Kong’s Hang Seng China Enterprises Index dropped 2.2 percent today, the most since Jan. 19, tracking declines among mainland shares as insurers and banks dropped. The Hang Seng Index fell 0.7 percent. Mainland stocks fell amid concern the economic slowdown is deepening and new share offerings will divert funds from existing equities.
Gold for immediate delivery briefly slipped below $1,200 an ounce, hitting $1,195.50 before climbing 0.1 percent to 1,207.68 today. The Bloomberg Commodity Index added 0.1 percent to 101.9888.
West Texas Intermediate crude fell 0.3 percent on Monday as Brent oil slid 4.9 percent to $59.54 a barrel. Brent was 0.9 percent higher today.
Stockpiles of oil in the U.S., the world’s biggest crude consumer, probably expanded by 3.95 million barrels last week, according to a Bloomberg News survey before an Energy Information Administration report due Wednesday. Supplies climbed over the prior seven weeks to 434.1 million, the most in records compiled by the EIA dating back to August 1982.
Consumer purchases in the U.S. adjusted for price growth rose 0.3 percent in January, data in Washington showed, boosting optimism over the U.S. recovery and stoking speculation over the timeline for higher rates.