Dollar drops as Treasuries rise; pound hit by BoE

The dollar gave up some of its recent gains on Thursday, declining before inflation data as traders confronted a range of catalysts from political risks to missiles in the Middle East. European stocks slipped, US equity futures rose, and the pound reversed an advance after the Bank of England (BoE) held interest rates.

Ten-year Treasury yields, which have been driving up the greenback and exacting pain on emerging markets, dipped back below 3% to push the dollar toward its first drop in five days.

The pound weakened as policymakers at Britain’s central bank voted 7-2 to keep rates unchanged in what was interpreted as a dovish hold. It then pared the decline as Governor Mark Carney struck a more hawkish tone in a press conference after the decision.

In equity markets, the Stoxx Europe 600 Index drifted downward on what is a public holiday in various parts of the region — markets are closed in many European countries, including Switzerland, Sweden, and Austria. US stock futures climbed ahead of the report on consumer prices, while oil extended its rally in New York.

The news agenda is offering no respite to investors this week, with tensions between Israel and Iran mounting just days after US President Donald Trump roiled the international community with his decision to ditch a nuclear accord with the Islamic Republic. Meanwhile, the stage is set for a populist government to form in Italy, and traders are rapidly coming to terms with an election upset in Malaysia. Many will now be looking to American inflation data as a welcome diversion.

Earlier in Asia, equities were broadly higher, while the New Zealand dollar slid after the central bank left the door open to an interest rate cut as inflation remains contained.

Malaysian markets were closed, though trading in non-deliverable forwards suggested the ringgit will tumble on Monday in the wake of the surprise ouster of the country’s ruling party.

The 2045-maturity dollar bond also declined. Developing markets more broadly signaled stability, and the MSCI Emerging Market Index rallied for a fourth day.

Stocks

The Stoxx Europe 600 Index fell 0.2% as of 7:49 am (EST), the first retreat in a week. Futures on the S&P 500 Index gained 0.2%, reaching the highest in more than three weeks on its sixth consecutive advance. The MSCI All-Country World Index increased 0.2% to the highest in three weeks.

The UK’s FTSE 100 Index fell less than 0.05%, the biggest fall in a week. Germany’s DAX Index jumped 0.3% to the highest in 14 weeks. The MSCI Emerging Market Index jumped 0.8% to the highest in more than a week on the biggest increase in almost two weeks. The MSCI Asia Pacific Index jumped 0.5% to the highest in more than a week on the largest climb in almost two weeks.

This article provided by NewsEdge.