Azernews.Az

By Bloomberg

The dollar extended gains, trading at a more than seven-year high versus the yen and the strongest in 11 years against the euro, amid speculation the U.S. will bring forward interest-rate increases. Chinese shares fell with copper after the nation’s producer prices plunged.

The Bloomberg Dollar Spot Index, which tracks the greenback versus 10 major peers, rose 0.4 percent by 1:44 p.m. in Tokyo. The U.S. currency advanced beyond 122 yen, while the euro fell through $1.08. The New Zealand dollar plunged 0.8 percent after a threat to poison infant formula in the biggest dairy exporter. Standard & Poor’s 500 Index futures slid 0.2 as a gauge of China shares in Hong Kong lost 0.8 percent. Copper fell 0.9 percent.

Federal Reserve Bank of Dallas President Richard Fisher, in his last speech at the helm of the Fed branch, said the central bank should begin to gradually raise rates as the labor market improves. The biggest drop in Chinese producer prices since October 2009 underscores how the rest of the world is struggling to maintain growth, a divergence with the U.S. that has driven the Bloomberg dollar gauge to a decade high.

“If the strong data flow keeps up, the market may shift its view toward earlier tightening by the Fed,” Todd Elmer, a strategist at Citigroup Inc. in Singapore, said by phone Tuesday. “When we look at the dollar appreciation that we’ve seen over time, clearly a large component of that -- in 2014 in particular -- reflected the fact that the rest of the world looked quite weak. There remains significant breathing room for the strong dollar trend to continue.”

Yen, Euro

The yen dropped as much as 0.7 percent to 122.03 per dollar, declining for a fourth day, its longest slump since the end of December. The Australian dollar plunged 0.7 percent to 76.48 U.S. cents. The Malaysian ringgit sank to its weakest level since March 2009.

The euro lost 0.5 percent to $1.0794, its weakest level since September 2003. The European Central Bank started buying debt as part of its quantitative easing program Monday, while Greece prepared to resume talks with its creditors this week. Euro-area officials are pressuring the debt-saddled nation to open its books and follow through on commitments agreed to in its rescue package.

The odds of a U.S. rate increase by September have jumped to 59 percent, from 49 percent on Thursday, futures showed. Federal Reserve policy makers next meet March 17-18. The S&P 500 and the Dow Jones Industrial Average rose at least 0.4 percent on Monday.

Poison Threat

“Every time the Fed has tightened policy after achieving full employment, it has driven the economy into recession,” Fisher said at Rice University in Houston Monday. Unemployment is “likely to reach the bottom of the range of natural-rate estimates” by the summer of 2015, he said.

The New Zealand dollar fell to 73 U.S. cents. Anonymous letters were received by Federated Farmers of New Zealand and Fonterra Co-operative Group Ltd. in November 2014, accompanied by small packages of milk powder which tested positive for the presence of a concentrated form of 1080, New Zealand Police said in statement.

Sodium fluoroacetate, also known as 1080, is used in baiting programs for a variety of pests, according to the website of New Zealand’s Department of Conservation. The letters threatened to contaminate infant and other formula with 1080 unless New Zealand stopped using 1080 for pest control by the end of March.

China Prices

Fonterra shares fell 0.4 percent, while Chinese infant- formula makers rallied. China Modern Dairy Holdings Ltd. rose as much as 5.4 percent in Hong Kong, the most since Feb. 10. YuanShengTai Dairy Farm Ltd. added 3.1 percent.

China’s consumer-price gain compared with the median projection for a 1 percent increase in a survey of analysts by Bloomberg News. Producer prices fell 4.8 percent from a year before, a 36th straight drop, driven by weaker commodity prices.

The Hang Seng Index fell 0.5 percent and the Hang Seng China Enterprises Index slipped toward its lowest close since Jan. 19. The Shanghai Composite Index retreated 0.1 percent.

Chinese lawmakers set a 2015 economic growth target of about 7 percent last week, the lowest goal in at least 15 years. The central bank has cut interest rates twice since November in a bid to preserve expansion, which has come down from more than 10 percent before the global financial crisis.

The S&P 500 slid 1.6 percent last week, the most since January, while the dollar index soared 2.3 percent as data showed the U.S. jobless rate had fallen within a range the central bank considers full employment.

MSCI’s Emerging Markets Index dropped 0.6 percent on Monday, falling for an eighth day to cap its longest slump this year.

The dollar’s strength undermined commodity prices, with gold sliding 0.4 percent to $1,162.07 an ounce and platinum losing 0.9 percent to $1,137.13 an ounce. Copper for three-month delivery on the London Metal Exchange slid to $5,824 a tonnne.

West Texas Intermediate crude oil was 0.3 percent higher at $50.13 in New York while Brent, the benchmark for more than half of global supplies, was little changed at $58.67 per barrel in London.