The dollar eased yesterday after an American labour market report suggested a go-slow approach to raising US interest rates, while global equity markets fell on more weak data from Europe, adding to worries about tepid growth around the world.
Crude oil slipped under $50 a barrel as Brent, the global benchmark, headed for a seventh straight weekly loss. Gold rose and was set for its first weekly gain in four weeks as political uncertainty in Greece boosted demand for safe-haven assets.
Investors remain concerned about the impact of lower oil prices and how that might expose certain trades in the financial markets, said Jack Ablin, chief investment officer at BMO Private Bank in Chicago. Data from Germany reflected weakness in the eurozone, which is still struggling to emerge from the economic crisis. German exports fell sharply in November and industrial output also declined.
US job growth increased briskly in December and the jobless rate dropped to a 6six-amd-a-half-year low, but wages slipped, buttressing the case for the Federal Reserve not to rush to raise interest rates.
Markets remain in tug-of-war as stock and bond investors over-react to economic data and global events, pushing US equities to new highs and bond yields to record lows, said David Kelly, chief global strategist for JPMorgan Funds in New York.
The dollar traded at 118.85 yen, a loss of 0.67 per cent on the EBS trading platform. The euro rose 0.3 per cent to $1.1827.
MSCI’s all-country world stock index, a measure of equity markets in 45 countries, fell 0.71 per cent. The pan-European FTSEurofirst 300 index of leading regional companies fell 1.71 per cent to 1,345.15.
On Wall Street, the Dow Jones industrial average fell 205.73 points, or 1.15 per cent, to 17,702.14. The S&P 500 slipped 22.12 points, or 1.07 per cent, to 2,040.02 and the Nasdaq Composite lost 48.06 points, or 1.01 per cent, to 4,688.13.
US Treasury debt prices rose on the view rates are on hold. Perceived odds on the Fed raising rates by September fell to 52 per cent, according to CME Fed watch, which tracks futures contracts. That was down from 60 per cent before the jobs data.
The benchmark 10-year note traded up 21/32 in price to yield 1.9449 per cent, according to Reuters data.
In Europe, government bond yields in the euro zone were just above record lows. About a quarter of the euro zone bond market now yields less than 10 basis points, while German bonds with maturities of up to five years are yielding zero or less.
Yields on 10-year Bunds, which set the standard for the bloc’s borrowing costs, fell to 0.488 per cent.