Dollar Rises to 12-Year High Amid European Bond-Buying, Fed Bets

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The dollar surged to the strongest level in almost 12 years as the specter of higher U.S. interest rates and the European Central Bank’s acceleration of its bond-buying program cascaded through global financial markets.

The U.S. currency rallied against 14 of its 16 major peers as national central banks in the euro region were said to have purchased sovereign debt for a second day in their quantitative-easing program. The dollar touched the highest in 7 1/2 years versus the yen and rose to a record against the Mexican peso.

The dollar appreciated 1.4 percent to $1.0698 per euro at 5 p.m. in New York and reached $1.0693, the strongest since April 2003. It touched 122.03 yen, a level unseen since July 2007, before trading little changed at 121.13 yen.

The greenback climbed to parity with Switzerland’s franc for the first time since the Swiss National Bank removed a currency cap against the euro in January.

Source: Bloomberg

Gold Hits 3-Month Low on Dollar Rise, U.S. Rate Expectations

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Gold fell to a three-month low on Tuesday, pressured by the dollar's rise to its highest in nearly 12 years and renewed expectations of a midyear interest rate increase in the United States.

Spot gold dropped to its lowest since Dec. 1 at $1,155.60 an ounce in early trading and was down 0.4 percent at $1,161.55 by 2:09, while U.S. gold for April delivery settled down $6.40 an ounce at $1,160.10.

Platinum fell to its lowest since July 2009 at $1,124 an ounce. The metal has dropped 6.3 percent since the start of the year on expectations of lower demand from the automotive sector and higher mine supplies.

The dollar climbed to its highest since September 2003 against a basket of major currencies, making gold more expensive for holders of other currencies.

Investor positioning indicated a bearish outlook. Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.43 percent to 753.04 tonnes on Monday.

Source: Reuters

Stronger Dollar Sends U.S. Stocks to Biggest Drop in Two Months

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The strongest dollar in nearly 12 years versus the euro and the specter of higher U.S. interest rates fueled a selloff in global equities that sent the Standard & Poor’s 500 Index to its biggest slide since Jan. 5. Oil and copper declined.

The S&P 500 fell 1.7 percent at 4 p.m. in New York, slipping below its average price for the past 50 days and erasing its gains in 2015. The Dow Jones Industrial Average lost 328 points in its biggest slide since Jan. 5. The Stoxx Europe 600 Index lost 0.9 percent. The euro weakened 1.4 percent to $1.0704 and a gauge of 20 emerging-market currencies fell for a ninth day. Yields on 10-year German securities dropped to a record, as the yield difference between 10-year Treasuries and bunds hit the widest since 1989. U.S. crude slid below $49 a barrel while copper dropped the most since January.

Federal Reserve Bank of Dallas President Richard Fisher said the central bank should begin to raise rates as the labor market improves. While policy makers from Sydney to Wellington, Tokyo, Zurich and Frankfurt are cutting rates and buying government bonds to stimulate growth, the Fed stands out in accepting a higher exchange rate as a sign of economic strength. The dollar has rallied this year versus 14 of 16 major counterparts.

Source : Bloomberg

European Stocks Fall With Energy Shares Amid U.S. Rate Concern

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European stocks fell for a second day as oil-and-gas shares dropped and concern grew the Federal Reserve is nearing an interest-rate increase.

The Stoxx Europe 600 Index lost 0.9 percent to 389.66 at the close of trading. It earlier rose as much as 0.2 percent. All 19 industry groups fell, with energy shares dropping the most. Royal Dutch Shell Plc, BG Group Plc and BP Plc dropped more than 3 percent as crude fell for a fifth day amid signs a global supply glut will persist.

The Stoxx 600 climbed on Friday to a seven-year high as the European Central Bank set a start date for its government-bond buying program. It has jumped 14 percent this year.

In the U.S., the Standard & Poor’s 500 Index wiped out its gains for the year, while the dollar strengthened to near a 12-year high versus the euro, amid speculation about a rate increase. In his last speech as Fed Bank of Dallas President, Richard Fisher said the central bank should start gradually raising rates. The Fed next meets on March 17-18.

Source: Bloomberg

S&P 500 May Fall 9% as Job Data Force Fed’s Hand, Deutsche Says

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Five weeks above 2,000 for the Standard & Poor’s 500 Index may be long enough, says Deutsche Bank AG’s David Bianco.

After last week’s U.S. employment report, investors are increasingly convinced the Federal Reserve will raise interest rates by mid-year, Bianco said. That could result in a decline of up to 9 percent in the benchmark gauge, according to Bianco. The dollar’s strongest level versus the euro since 2003 threatens U.S. profit growth, he said.

U.S. stocks wiped out gains for the year today, pushing the S&P 500 down 1.4 percent to 2,050.42 at 12:04 p.m. in New York. The dollar also applied pressure as it rallied against all of its major peers today, surging to an almost 12-year high versus the euro and the highest in 7 1/2 years against the yen.

The S&P 500 tumbled the most in two months on Friday amid a report employers added more jobs than forecast in February and the unemployment rate fell to 5.5 percent, the lowest in almost seven years, showing the labor market is sustaining progress after the best annual performance in 15 years.

Source : Bloomberg