Global equity markets rose and the dollar climbed to its highest since 2009 yesterday as momentum grew for the European Central Bank to launch a bond-buying programme and data showed US economic resiliency in the face of slowing world growth.
US Treasuries prices steadied after two days of losses as bond traders awaited a possible ECB shift in monetary policy today and a key report on American unemployment tomorrow.
Most euro zone bond yields headed toward record lows, with Italian 10-year yields falling below two per cent for the first time. The ECB is under pressure to do more to boost growth and fend off deflation as oil prices slump and business activity in the bloc grew less than expected in November.
The euro skidded to a 27-month trough against the dollar, which also hit a seven-year peak against the yen. The greenback got a boost as Federal Reserve officials made upbeat comments about the US economy, feeding expectations for a US interest rate hike in mid-2015.
“Investors are looking to increase their holdings of the ollar and decrease the euro because they’re anticipating further lower price action on the euro on the basis of... further easing and stimulus from the ECB,” said Neil Jones, head of hedge fund FX sales at Mizuho Bank in London.
The dollar rose to its highest level since March 2009 against a basket of major currencies at 89.005.
The euro last traded near $1.2304, down 0.62 per cent on the day. During the session, it fell as low as $1.2302, its weakest since August 2012. Against the yen, the dollar rose 0.59 per cent to 119.78.
European stocks rose, led by shares in Greece, Italy and Spain, as investors bet the ECB would signal further economic stimulus. US stocks edged higher, led by commodity-related shares, as data continued to show a strengthening US economy. Markets reacted mutedly to data showing the US private sector created 208,000 jobs last month, fewer than expected. The numbers, however, suggested a slowing global economy is having a limited impact on domestic US activity.MSCI’s all-country world stock index rose 0.07 per cent, while the FTSEurofirst 300 index of top European shares closed up 0.54 per cent at 1,399.97 points. The Dow Jones industrial average rose 12.91 points, or 0.07 per cent, to 17,892.46. The S&P 500 gained 4.52 points, or 0.22 per cent, to 2,071.07 and the Nasdaq Composite added 9.82 points, or 0.21 per cent, to 4,765.63.
The benchmark 10-year Treasury was last off 3/32 in price to yield 2.2958 per cent. Brent oil fell below $71 a barrel in choppy trading as the market searched for a price floor after a near 40 per cent fall since June, and as US crude stocks declined last week.
Brent for delivery in January was down 15 cents at $70.39 a barrel after falling by $2 on Tuesday. US crude for January delivery rose 51 cents to $67.39 a barrel.