BLBG: Dollar Strengthens Before Fed Minutes as Metals Advance
The dollar strengthened to an 11-month high versus the euro before the release of Federal Reserve minutes, while industrial metals rose. The pound advanced after the Bank of England said two officials voted for an increase in interest rates.
The dollar gained 0.3 percent to $1.3280 per euro at 7 a.m. in New York, after appreciating to $1.3275, the strongest level since Sept. 13. The pound strengthened against all of its 16 major peers. The MSCI Hong Kong Index climbed 1.3 percent, surpassing its all-time high reached in October 2007. The Stoxx Europe 600 Index fell 0.1 percent, while Standard & Poor’s 500 Index futures dropped less than 0.1 percent. Zinc added 1.1 percent and nickel increased 1.3 percent.
The Fed minutes may give investors more clues on the outlook for U.S. interest rates, after data yesterday showed inflation remains below target, even as the housing market gathers steam. Chair Janet Yellen will address global central bankers this week. The Bank of England said Martin Weale and Ian McCafferty wanted an interest-rate increase this month, marking the first split on rates in more than three years and the first under Governor Mark Carney. Argentina plans to pay its foreign-currency bonds locally to sidestep a U.S. court ruling that blocked payments last month.
“The focus is shifting to Friday’s speech by Yellen and Jackson Hole,” said Manuel Oliveri, a foreign-exchange strategist at Credit Agricole’s corporate and investment banking unit in London. “There is the notion in the market that she may turn less dovish, that’s one of the reasons why the dollar is in demand.”
Jackson Hole
The Fed minutes are from the central bank’s July 29-30 meeting, when it cut bond purchases by $10 billion for a sixth time. Yellen, who has said key rates will stay low for some time after the conclusion of asset purchases, will speak on labor markets Aug. 22 at the Fed Bank of Kansas City’s economic symposium in Jackson Hole, Wyoming. Policy makers including European Central Bank President Mario Draghi will also speak.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major currencies, advanced 0.2 percent to 1,025.66. The gauge earlier rose to 1,025.85, the highest since Feb. 7. The pound strengthened 0.5 percent to 79.78 pence per euro, and advanced 0.2 percent to $1.6645.
Yen Weakens
The yen weakened to 103.32 per dollar after slipping 0.3 percent last session. Japan said exports rose 3.9 percent from a year earlier in July, exceeding the 3.8 percent increase forecast by economists. Imports also unexpectedly grew.
Yields on 10-year U.S. Treasuries were little changed at 2.41 percent.
Europe’s higher-yielding bonds advanced, with rates on Italian and Spanish 10-year securities dropping to records. Italian 10-year (GBTPGR10) yields fell two basis points to 2.57 percent, after touching 2.567 percent, the lowest since Bloomberg started collecting the data in 1993.
In European equity markets, the Stoxx 600 is little changed today after rising 1.8 percent in the past two days. Heineken NV (HEIA) surged 7.4 percent as the world’s third-biggest brewer posted profit in the first half that topped analysts’ estimates and said it expects growth to moderate in the remainder of the year. Carlsberg A/S slumped 2.8 percent after the biggest brewer in Russia cut its full-year earnings outlook amid mounting economic difficulties in eastern Europe.
Futures (SPX) on the S&P 500 expiring in September fell less than 0.1 percent after the index rallied 1.4 percent in the past two days. The gauge closed 0.3 percent away from its record.
Hong Kong
Bank of China, the country’s fourth-largest bank, slid 0.3 percent in Hong Kong. The lender boosted the amount of money it sets aside for bad loans as it reported the slowest rate of profit growth for five quarters yesterday. The MSCI Hong Kong Index rose to a record, rebounding 21 percent from a February low, as the city’s bourse operator led gains on optimism about a stock-trading link with Shanghai and developers jumped on record home prices.
The MSCI Emerging Markets Index slipped 0.1 percent, after closing yesterday at a three-year high.
Russia’s Micex rose for a ninth day, the longest run of gains since April 2010. The ruble fell 0.3 percent against the dollar. The Ukrainian hryvnia weakened 1.5 percent, declining for a second day after policy makers yesterday raised their overnight refinancing rate 2.5 percentage points to 17.5 percent.
Argentina Debt
South Africa’s rand slipped 0.3 percent versus the dollar as a report showed inflation slowed more than economists anticipated. Standard Bank Group Ltd. led stocks lower in Johannesburg, dropping 2.9 percent, after Moody’s Investors Service downgraded the local-currency ratings of South Africa’s four biggest lenders and kept them on review for a further cut following the collapse of African Bank Investments Ltd.
Argentina’s government will submit a bill to lawmakers that lets overseas debt holders swap into new bonds governed by local law with the same terms, President Cristina Fernandez de Kirchner said in a nationwide address yesterday. Payments will be made into accounts at the central bank instead of through Bank of New York Mellon Corp., the current trustee. Creditors opting to keep their notes will also receive payments locally, she said.
Nasdaq 100 Index futures rose less than 0.1 percent after the index of the largest and most-active non-financial Nasdaq companies rose 0.5 percent to close at the highest level since September 2000.
Zinc, Nickel
The Nasdaq Composite advanced 0.4 percent yesterday, while the S&P 500 rose 0.5 percent to 1,981.60, nearing its record closing high of 1,987.98 set July 24. Apple surged 1.4 percent to $100.53, leaving world’s most valuable technology company up 25 percent this year.
The U.S. consumer price index rose 0.1 percent in July from the previous month and was up 2 percent from a year earlier, matching median economist estimates compiled by Bloomberg. Stripping out volatile food and fuel, the so-called core measure also climbed 0.1 percent, less than was projected.
A separate report showed home construction in the U.S. rebounded in July, with housing starts jumping 15.7 percent to the strongest annualized rate since November, halting a two-month retreat.
Zinc for delivery in three months gained for a third day, rising to $2,326.50 a metric ton on the London Metal Exchange. Zinc, used to galvanize steel, is up 13 percent this year. Copper rose 0.5 percent to $6,899.75 a ton, while nickel added 1.3 percent to $18,790 a ton.
To contact the reporters on this story: Nick Gentle in Hong Kong at ngentle2@bloomberg.net; Shelley Smith in London at ssmith118@bloomberg.net
To contact the editors responsible for this story: Stuart Wallace at swallace6@bloomberg.net Shelley Smith, Michael Shanahan
