Finance

U.S. dollar squeezed by cautious Fed

U.S. dollar squeezed by cautious Fed”

Across emerging markets, where investors had been concerned about faster USA hikes and more political upheaval in Europe, MSCI's sector equity index jumped almost 2 per cent - the biggest daily gain since last July. The Nasdaq composite slipped 3 points, or 0.1%, to 5,897.

By contrast, the euro was mostly unruffled by the result of the Dutch election Thursday morning, even after preliminary results backed up the earlier exit polls, showing that Prime Minister Mark Rutte had held off the challenge of far-right rival Geert Wilders. MSCI´s broadest index of Asia-Pacific shares outside Japan jumped 1.2 percent to its highest level since mid-2015.Spread betters pointed to solid opening gains for European bourses, while E-mini futures for the S&P 500 edged up another 0.1 percent. Once the yield gets to 2.60 percent, he said many buyers will likely pounce given still-modest growth in the economy and inflation, which should help keep a lid on rates.

The rate forecasts "triggered selling on disappointment, as an increasing number of market participants had bet on a total of four rate hikes this year", an official at a major Japanese bank said.

The 10-year Treasury yield fell to 2.51 percent from 2.54 percent late Thursday.

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The central bank on Wednesday raised rates by a quarter point to 0.75-1.00 percent, responding to the continued strength in the labor market and a pick up in inflation. Wilders, like Marine Le Pen in France (http://www.marketwatch.com/story/is-frexit-next-why-france-is-starting-to-really-freak-out-investors-2017-02-07), has expressed an interest in the Netherlands leaving the European Union, something that caused widespread volatility when the United Kingdom voted to do so in June. The People's Bank of China hiked the rate for its six-month and one-year medium-term lending facility and open-market repurchase operations by 0.1%.

Oracle gave the biggest boost to the S&P, with an 8.3 percent rise after the business software maker issued a better-than-expected quarterly profit.

U.S. gold futures were down 30 cents an ounce at $1,226.80.

A protracted bout of weakness for the US dollar would be seen as positive for commodities priced in the currency, said Richard Franulovich, a forex analyst at Westpac.

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ENERGY PAIN: The drop in oil prices resumes a slide that's been ongoing since late last month. The precious metals had lost ₹ 400 in last two days.

At German lender Commerzbank AG, currency analyst Antje Praefcke also said that "the euro seemed unimpressed" Thursday, but warned that the euro remains vulnerable because "political risks in the eurozone remain high with a view to the French elections".

CURRENCIES: The dollar slipped to 113.08 Japanese yen from 113.39 yen.

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