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Euro extends gain amid mixed stocks, gold advances

Aug 08 2017 11:57
Bloomberg: Samuel Potter

London - Europe’s common currency edged higher and the dollar fell back in a lacklustre trading session on Tuesday. European stocks erased a drop to trade sideways, while gold climbed with oil and bonds mostly rose.

The euro joined most G-10 peers in strengthening against the greenback, which slipped alongside both Treasuries and US stock futures. The Stoxx Europe 600 Index was directionless amid mixed European benchmark gauges, though moves were not large. West Texas Intermediate crude started on the back foot but reversed during European hours.

All eyes were on South Africa’s rand as lawmakers prepared to decide the fate of President Jacob Zuma. The currency pared yesterday’s jump.

Markets appear to be in a holding pattern, with investors seeking catalysts amid the summer slowdown. The focal point of this week looks set to be Friday’s US inflation data, which may be key to the interest-rate outlook of the world’s biggest economy.

Two Federal Reserve officials said on Monday that soft US inflation was a problem, but played down the risk of market disruption when the central bank starts shrinking its balance sheet.

"Markets are in sleep mode," Hussein Sayed, a strategist at Forextime, a retail currency broker, wrote in an emailed note. "Limited news flow is what can be blamed for the narrow trading ranges, but expect this to change as we get closer to Friday’s US CPI release."

Meanwhile, the latest economic data out of China pointed to steady global demand. The trade surplus in the world’s second-largest economy widened for a fifth month in July as demand for Chinese goods held up in the face of escalating tensions with the US.

Also among the key events looming this week:

UK factory output for June is due Thursday, with industrial production for Italy on Wednesday and for France on Friday. This week’s Fed speakers aren’t done: keep a keen ear out for comments by New York Fed boss Bill Dudley on Thursday.

Dutch Prime Minister Mark Rutte resumes talks to form a coalition government on Wednesday. Argentina, Mexico, New Zealand, Peru, the Philippines, Serbia and Zambia set monetary policy.

And here are the main moves in markets:

Stocks

The Stoxx Europe 600 Index climbed less than 0.05% as of 9:07am in London. The MSCI All-Country World Index increased 0.1% to the highest on record. The UK’s FTSE 100 Index declined less than 0.05%.

Germany’s DAX Index rose 0.1%. Futures on the S&P 500 Index fell less than 0.05% to 2 475.25.

Currencies

The euro climbed 0.1% to $1.1814. The Bloomberg Dollar Spot Index fell 0.1%, the largest fall in more than a week. The British pound gained less than 0.05% to $1.3044. South Africa’s rand dipped 0.1% to 13.2396 per dollar.

Bonds

The yield on 10-year Treasuries rose less than one basis point to 2.26%. Germany’s 10-year yield decreased less than one basis point to 0.46%. Britain’s 10-year yield gained less than one basis point to 1.14%.

Commodities

Gold gained 0.2% to $1 260.24 an ounce, the biggest rise in more than a week. West Texas Intermediate crude rose 0.6% to $49.48 a barrel, the highest in more than a week.

Asia

Japan’s Topix index fell 0.2% at the close with SoftBank Group declining even after profit topped estimates. Sony gained after it was added to the JPX-Nikkei Index 400.

Australia’s S&P/ASX 200 Index lost 0.5% and South Korea’s Kospi index dropped 0.2%.
The Japanese yen jumped 0.2% to 110.55 per dollar.

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