Dollar falls to pre-election levels

Cornelia Mascio
Mag 19, 2017

Yen's dominant market performance has been pushing Asian stocks to the brink, Hong Kong's Hang Seng Index suffered a loss of about 0.19%, while the mainland stock, Shanghai Composite loses 0.26% at 3104.74 at 8.22 points; on the other hand, the Shenzhen Composite was surprisingly up by 0.13% at 1867.68 or 2.42 points.

UK's benchmark FTSE 100 closed down by 0.25 percent, FTSEurofirst 300 ended the day down by 1.36 percent, Germany's Dax ended down by 1.4 percent, France's CAC finished the day down by 1.8 percent.

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"We aren't likely to make major changes".

Though stocks flashed warning lights again, the dollar seemed to be going for the "calm down" option.

Brent crude LCOc1 fell 0.3 percent to $51.53 a barrel while U.S. West Texas Intermediate (WTI) crude CLc1 slipped 0.6 percent.

At the time of the report, the Dollar Spot Index is up 0.06% at 97.629, with cable bouncing 0.41% to $1.30226, the April retail sales figures breaking the wall that has held the pound back from $1.30 levels. The central bank's policymaking committee is slated to meet next month.

"My feeling is that the current level of the euro is too high, and isn't sustainable based on fundamentals, when USA growth and the economy are not so bad, so I'm feeling that the current levels are a very good chance to sell the euro against the dollar", Brown Brothers Harriman's Murata said.

The political jitters coming out of the United States remained the dominant factor for traders, however.

The allegations have not only thrown doubt over the future of the pro-growth policies that Trump promised, but they have raised the possibility he could end up leaving the presidency.

"There has been a lot of focus on the USA president who admitted that he did share information with Russian Federation", said Greg McKenna, chief market strategist at AxiTrader.

Both the Dow and the S&P 500 fell below their 50-day moving average for first time since late April. Lately, the major indexes have pushed towards record levels, with the S&P and Nasdaq notching all-time highs earlier this week.

"Some politicians might try to begin the impeachment process, and if they do, that would take much time to carry it out, and while it is ongoing, it would be nearly impossible to push fiscal stimulus through", said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo, noting that it took nearly two years for the Bill Clinton impeachment process to proceed though Congress.

Trump was not the only world leader under scrutiny.

The Dow fell, led by slides in shares of Goldman Sachs and those of JPMorgan Chase, recently down 4.3 per cent and 2.7 per cent respectively.

Among commodities, which have also been highly volatile in recent weeks but due mainly to supply and demand issues, there were steadier signals.

Gold hovered near a two-week high thanks to the weaker dollar and the risk aversion gripping the broader markets.

The US currency continued to weaken against the Singapore dollar on Thursday, declining 0.2 per cent to S$1.3915 from Wednesday's close.

Tokyo plunged 1.3 percent, with investors brushing off data showing Japan's economy posted another quarterly rise in growth, marking its longest expansion in more than a decade.

Nasdaq had its steepest one-day loss since June 24, after Britain voted to exit the European Union, as did S&P's financial and technology sectors.

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