Dollar remains champion

The dollar climbed to an 11-month high versus the euro, while European stocks and bonds advanced on prospects for increased economic stimulus. U.S. equity-index futures rose as Burger King Worldwide Inc. jumped on merger activity in a tax-saving move.

The U.S. currency (NYBOT:DXU14) appreciated 0.4% to $1.3194 per euro by 9 a.m. in New York, trading at its strongest level since Sept. 9. The Stoxx Europe 600 Index added 0.7% in below average trading as U.K. markets were closed for a holiday. Standard & Poor’s 500 Index (CME:SPU14) futures rose 0.4%. Burger King rallied 12% in early trading. Yields on 10-year Italian and Spanish bonds dropped to all-time lows as did rates on German five-year and Belgian two-year notes. Gold (COMEX:GCQ14) slipped 0.2% while Brent crude (NYMEX:SCU14) advanced.

European Central Bank President Mario Draghi and Bank of Japan chief Haruhiko Kuroda raised the likelihood of measures to support growth during a meeting of central bankers in Jackson Hole, Wyoming. Federal Reserve Chair Janet Yellen said slack remains in the labor market, though rates could be raised sooner than policy makers anticipate should progress continue to surpass estimates. German business confidence dropped for a fourth month, according to an Ifo institute report today, before data that will probably show U.S. new-home sales rose, based on a Bloomberg survey.

“The messages from Yellen and Draghi solidify a market view on policy divergence between the Fed and the ECB,” said Peter Rosenstreich, a chief foreign-exchange analyst at Swissquote Bank SA in Gland, Switzerland. “There were some holdouts in the market who didn’t quite believe that Yellen is ready for a tighter policy and Draghi is ready to put forward any significant broad-based purchases. What we heard over the weekend is that yes, these are on the table.”
 

Euro Weakens
 

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, climbed 0.1% today, extending last week’s 0.9% advance and headed for the highest close since Feb. 3.

The euro (CME:E6U14) weakened against all but one of its 16 major counterparts. ECB policy makers “stand ready to adjust our policy stance further” and will use all available instruments to “ensure price stability over the medium term,” Draghi said on Aug. 22.

BOJ Governor Kuroda said at Jackson Hole that his bank’s monetary policy was “having its intended effect” and that central banks must fight deflation by any and all means.

The Italian 10-year rate dropped as much as 14 basis points to 2.44%, the lowest since at least 1993. German five-year yields fell five basis points to 0.17% after reaching 0.164%, while Belgian two-year yields slid below zero for the first time.

The 10-year U.S. Treasury yield (CBOT:ZNU14) slipped two basis points to 2.38%.
 

Banks Gain
 

Seven shares advanced for every one that declined in the Stoxx 600, while 191 shares were unchanged and trading was 68% lower than the 30-day average, according to data compiled by Bloomberg. Banks gained, with BNP Paribas SA advancing 1.6% and Banca Monte dei Paschi di Siena SpA climbing 5%.

Arkema SA rose 2.9% after Deutsche Bank AG recommended buying shares of the French chemicals maker. Eurazeo SA advanced 3.1% after Societe Generale SA raised its rating on the private-equity firm. Vivendi SA climbed 1.1% after a report that Telefonica SA is considering raising its bid for the French media company’s Brazilian Internet-provider unit GVT.

Futures on the S&P 500 rose after the index rallied for a third week. It closed at a record on Aug. 21.

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