Dollar extends decline for third day
There was no respite for the dollar yesterday, with the greenback extending the decline that has taken it to the lowest level in three years. US stock futures advanced as European equities nudged higher, and gold added to recent gains.
In Abu Dhabi, the ADX closed down 0.35 per cent at 4,627.47, while in Dubai, the DFM eased down 0.44 per cent to 3,463.48.
The dollar slid against almost all its major peers, taking its losing streak to three days as US Treasury secretary Steven Mnuchin said the decline provides a boost to the American economy through trade.
The move happened even as the yield on 10-year Treasuries increased, tracked by those of most European government bonds as data showed the eurozone economy strengthened further at the start of 2018.
As the region’s common currency gained the Stoxx Europe 600 Index fell before reversing, while emerging-market equities climbed a ninth day in the longest streak since April 2015. The record winning run for Chinese stocks in Hong Kong continued.
The pound surged as UK employment rose and wage growth ticked higher.
Investors are keeping an eye out for further news from Davos, Switzerland, where the world’s business and political elites have gathered for an annual conference that will feature the leaders of the US, UK and Germany among others.
The dollar remains a key focus as traders increasingly cite concerns about a widening US trade deficit that has been highlighted by the US President Donald Trump’s protectionist moves.
“We’re looking for the dollar to continue to depreciate against most currencies,” said Daniel Morris, a senior investment strategist with BNP Paribas Asset Management. “The US economy has a current-account deficit and it needs to close that – one way to do that is for the dollar to depreciate.”
Meanwhile, the yen pushed past 110 per dollar for the first time since September due to the weak greenback, and South Africa’s rand traded below 12 per dollar for the first time since May 2015. The US currency’s slide also fed into commodities, with oil in New York rising even amid signs of a possible gain in US crude stockpiles.