BLBG: Dollar Rebounds as Europe Stocks Decline With Bonds; Gold Rises
The dollar climbed from a four-month low as speculation mounted Federal Reserve policy will diverge from other central banks. Bonds resumed declines and European stocks fell while gold rose to a three-month high.
The Bloomberg Dollar Spot Index advanced 0.3 percent at 6:30 a.m. in New York as the currency’s biggest gain came versus the New Zealand dollar. Treasury 10-year note yields increased two basis points to 2.17 percent and Greece’s rate jumped 64 basis points to 11.40 percent. The Stoxx Europe 600 Index lost 0.2 percent and Standard & Poor’s 500 Index futures slipped 0.2 percent. Shares in Shanghai fell for a second day. Gold rose 0.4 percent to $1,229.90 an ounce.
Reserve Bank of Australia Deputy Governor Philip Lowe said policy makers retain scope to cut interest rates further while plans to curb New Zealand’s housing boom gave its central bank more room to take steps to support the economy, underlining divergence with the Fed as it gauges when to raise rates. European Union leaders meet in Riga from May 21 amid few signs of progress in talks between Greece and its creditors.
“This could be the start of a more meaningful rebound in the dollar,” said Adam Myers, the European head of foreign-exchange strategy at Credit Agricole SA’s corporate and investment banking unit in London. “The data is going to improve quite quickly in the second quarter and the Fed will still tighten as planned in the third quarter this year.”
The dollar strengthened against the euro for the first time in five days, gaining 0.6 percent to $1.1380. It reached $1.1467 on May 15, the weakest level since Feb. 6.
Data this week will probably show housing starts rose and manufacturing increased, according to Bloomberg surveys of economists.
Losing Streak
New Zealand’s dollar slid 0.8 percent to 74.18 U.S. cents and the krone slipped 0.7 percent to 7.3637 per dollar.
The Bloomberg dollar index, which tracks the U.S. currency against 10 peers, capped its longest streak of weekly losses since October 2013 on Friday. Hedge funds and other large speculators trimmed bets on dollar gains for a seventh straight week through May 12, the longest streak since April 2014.
Porsche Automobil Holding SE and Volkswagen AG led a gauge of automakers higher, sending Germany’s DAX Index up 0.7 percent for one of the biggest gains among western-European markets. Commodity producers posted the second-biggest advance among industry groups in the Stoxx 600.
Greece’s ASE Index lost 1.8 percent for a second day of declines.
M&S Rises
Marks & Spencer Group Plc gained 1.9 percent after a report that the retailer may return cash to shareholders. Aveva Group Plc jumped 7.5 percent after the Sunday Times said Schneider Electric SE has held talks with bankers about a bid for Aveva. Edenred slid 2 percent after the company that sells prepaid meal vouchers said its chief executive officer will leave on July 31.
S&P 500 E-mini futures expiring in June were little changed after the index climbed for a second week.
The MSCI Emerging Markets Index lost 0.1 percent, falling for the first time in four days. The Hang Seng China Enterprises and Shanghai Composite Index both fell 0.6 percent.
Twenty Chinese companies are scheduled to sell initial public offering shares from Tuesday to Thursday, which may freeze 2.8 trillion yuan ($451.1 billion), based on the median estimate of a Bloomberg survey.
Russia’s ruble strengthened for a second day, gaining 1.2 percent 49.3660, on higher oil.
Capital Gains
Egyptian had their biggest gain in almost two years, with the benchmark EGX 30 Index climbing 6.2 percent. The government suspended implementing a capital gains tax for two years to protect financial markets, the state-run Middle East News Agency reported, citing Cabinet spokesman Hosam Alkaweesh.
Treasury 10-year notes fell before the Federal Reserve this week releases the minutes of its latest meeting, indicating how close it is to raising interest rates.
German 10-year yields rose two basis points to 0.64 percent and rates on Portugal’s bonds climbed 10 basis points to 2.38 percent.
McDonald’s Corp. and United Techonologies Corp. are selling bonds in euros, according to people familiar with the matter. The restaurant chain hired banks to arrange the sale of securities that mature from 2019 through to 2035, while the maker of jet engines, elevators and air conditioners is marketing its first securities in the single currency.
Gold climbed to the highest level since Feb. 17. Silver advanced 1.3 percent.
Nickel extended a weekly decline, falling 1 percent to $13,845 a metric ton as the Shanghai Futures Exchange sought to ease a shortage of supply to the bourse and data showed home prices slid in China, the world’s biggest consumer.
