Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

4-Traders Homepage  >  News

News

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesHot NewsMost Read NewsRecomm.Business LeadersCalendar 

Euro under a cloud in Asia, stocks sit on gains

share with twitter share with LinkedIn share with facebook
share via e-mail
0
06/11/2014 | 08:51am CET

The euro came under mounting pressure on Wednesday as the European Central Bank's embrace of negative interest rates encouraged flows out of the zone, while Asian shares consolidated near recent highs.

The single currency was slipping across the board as investors looked to borrow euros at super-low rates and buy higher-yielding assets abroad, the so-called carry trade.

"The chase for yield looks like it has further to run," said Shane Oliver, head of investment strategy at AMP Capital.

"The ECB’s actions provide a reminder global monetary conditions remain very easy which is supportive of relatively high yield assets and growth assets generally."

In contrast the dollar found support in a run of improving U.S. economic data which pushed up Treasury yields and stoked speculation the Federal Reserve might sound less dovish on policy when it meets next week.

That diverging outlooks shoved the euro down to $1.3536 and further away from a $1.3668 peak scored at the start of the week.

It also hit a seven-month trough on the higher-yielding Australian dollar and to near its lowest against the pound since late 2007.

Action in equity markets was more muted with many indices already having come a long way. MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.12 percent from a three-year peak.

The MSCI index of emerging markets has also been on a roll to reach its highest since May 2013, in part on speculation the ECB's increasingly aggressive easing will encourage fund flows to the emerging world.

Japan's Nikkei ended up 0.5 percent aided by MSCI's decision to remove South Korea and Taiwan indexes from its review list for reclassification to developed markets, keeping them in the emerging markets classification.

There had been speculation Tokyo equities would take the brunt of rebalancing if Korean and Taiwanese shares were reclassified to developed markets.

Moves had been minor on Wall Street with the Dow up 0.02 percent, while the S&P 500 down 0.02 percent and the Nasdaq Composite 0.04 percent firmer.

RISING YIELDS

The flow of U.S. data has been bright enough to soothe worries over the economy after a disappointing first quarter. Tuesday's releases showed small business confidence and job openings reaching heights not seen since 2007.

That in turn has led the futures market <0#FF:> to nudge forward the likely timing for a first rate hike from the Federal Reserve, though that is still well into 2015.

Likewise, U.S. Treasury yields have reversed decisively higher with 10-year paper paying 2.646 percent compared to a trough of 2.402 percent just two weeks ago.

"The bull moves in bonds that began early this year are now officially over," said William O'Donnell Treasury strategist at RBS Markets. "As such, I still expect cash 10-years to trade at 2.80 percent over the coming month."

The prospect of higher yields has offered some support to the U.S. dollar which held at 80.811 against a basket of currencies, a long way from May's low of 78.906.

Still, the broader moves were more about euro weakness than dollar strength. Sales of euros for yen, for instance, were sizable enough to push the yen up on the dollar. The euro fell to 138.44 yen and the dollar to 102.25.

The adoption of negative deposit rates by the ECB has sparked talk reserve managers at other central banks were trimming their euro holdings, and that the very low yields offered by peripheral euro zone debt was finally discouraging demand for the paper.

In commodities, gold was firm at $1,261.50 an ounce as a breakdown in strike talks in South Africa buoyed palladium and platinum.

Brent oil gained 21 cents to $109.73 a barrel, while U.S. crude prices added 12 cents to $104.47.

(Editing by Shri Navaratnam)

By Wayne Cole

share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news
Date Title
02:49a Banking sector can handle NPLs
02:48a SAMSUNG ELECTRONICS : Seoul court begins reviewing arrest of Samsung heir
02:48a NRTH ST TELE'A' : Rain, water release from Shasta Dam expected this week
02:46a Brower Piven Encourages Investors Who Have Losses In Excess Of $100,000 From Investment In Universal Health Services, Inc. (UHS) To Contact Brower Piven Before The Lead Plaintiff Deadline In Class Action Lawsuit
02:46a Brower Piven Encourages Investors Who Have Losses In Excess Of $100,000 From Investment In Rent-A-Center, Inc. (RCII) To Contact Brower Piven Before The Lead Plaintiff Deadline In Class Action Lawsuit
02:46a Brower Piven Notifies Investors of Class Action Lawsuit And Encourages Those Who Have Losses In Excess Of $100,000 From Investment In Fenix Parts, Inc. (FENX) To Contact Brower Piven Before The Lead Plaintiff Deadline
02:46a IDP EDUCATION : .com Announces Manifold Studying Opportunities in Different Countries
02:46a CHINA LIFE INSURANCE : Announcement of premium income
02:46a MIDDLE ISLAND RESOURCES : Sandstone Gold Project WA Update
02:46a FM FREIGHT MANAGEMENT BHD : Others
Latest news
Advertisement
Hot News 
3.06%REYNOLDS AMERICAN : BAT Agrees to Pay $49 Billion to Take Full Control of Reynolds -- Update
-4.02%QUALCOMM : Federal Trade Commission Files Antitrust Lawsuit Against Qualcomm
7.11%NOBLE ENERGY : to Buy Oil and Gas Company Clayton Williams -- 2nd Update
-6.51%COMERICA INCORPORATED : Says Interest Rates, Oil Prices Boost Results
-4.17%Morgan Stanley's profit doubles on bond-trading surge
Most Read News
07:32p SAMSUNG ELECTRONICS : chief Lee arrives for hearing on arrest warrant
07:11p General Motors says to invest additional $1 billion in U.S.
06:07pDJQUALCOMM : Federal Trade Commission Files Antitrust Lawsuit Against Qualcomm -- Update
06:36p NOTICE OF VALUATION OF REAL ASSETS : : Asset Valuation
06:40p LAZARD : World Dividend & Income Fund Declares Monthly Distribution
Most recommended articles
08:15aDJS&P 500, Nasdaq Futures -- Technical Analysis
07:56pDJBAYER : Will Keep Monsanto Jobs in U.S., Trump Team Says -- 2nd Update
07:47pDJMCKESSON : to Pay $150 Million for Failing to Report 'Suspicious' Drug Orders
07:35p CAMECO : expects to report net loss for 2016, cut jobs at uranium mines
07:32p SAMSUNG ELECTRONICS : chief Lee arrives for hearing on arrest warrant