Dollar thrown, buoyant bonds for inflation precaution of the Fed


SYDNEY (Reuters) – The dollar was on the defensive on Thursday after suffering its worst beating in five months, while the bonds celebrated a return on speculation that the Federal Reserve might not adjust US policy so aggressively as was thought.

Stacks of US dollar bills are stacked at the headquarters of the Money Service Austria company in Vienna, Austria, on November 16, 2017. REUTERS / Leonhard Foeger

Movements in the Asian equity markets were lower and the Japanese markets closed for a vacation and the United States off for Thanksgiving. Spreadbetters signaled a slightly easier opening for major European exchanges.

MSCI's broader index of Asia and the Pacific shares outside Japan. MIAPJ0000PUS reached a new 10-year high with an increase of 0.15 percent, as did the main Hong Kong index .HSI.

The dollar's defeat came after minutes of the last Federal Reserve meeting that showed that "many participants" were worried that inflation would remain below the bank's 2 percent target for longer than expected.

That echoed the comments of Fed Chair Janet Yellen that she was not sure about the inflationary outlook and led markets to cut prices for further increases next year.

While a movement in December to between 1.25 and 1.5 percent still has an almost complete price, the futures of the Federal Reserve funds <0#FF:> recovered to show rates of only 1.75 percent by the end of next year.

"The US dollar was already teetering on Thanksgiving when the FOMC minutes gave another push," said Sean Callow, senior badyst at Westpac. "The FOMC seems to be increasingly uncomfortable with the" continued smoothness "of inflation."

"Investors can be forgiven for wondering why they should buy more US dollars if we go to a 'Powell pause' in the first half of 2018," he added, referring to the newly appointed Federal Reserve chairman, Jerome. Powell.


Against a basket of currencies, the dollar was squeezed at 93,184 .DXY, having lost 0.75 percent overnight.

The euro enjoyed the view at $ 1.1834 EUR = after rising from $ 1.1731 on Wednesday. The dollar also plunged to 111.27 yen JPY =, near its lowest level since September 20. The movement of the night was the biggest drop in a single day against the yen since May.

The moderate turnaround of the Federal Reserve helped break the inexorable sale of US Treasury bonds. UU In the short term, with yields on the two-year note US2YT = TWEB falling almost five basis points to 1,727 percent. That was the most pronounced daily fall since the beginning of September.

The rally extended to Asia, where yields on 10-year Australian bonds AU10YT = RR fell to their lowest level since June and traders expected European bonds to continue as well.

Wall Street had been an oasis of calm compared to the Dow Jones. The DJJ lost 0.27 percent, while the S & P 500 .SPX lost 0.08 percent and the Nasdaq .IXIC added 0.07 percent.

Verizon ( VZ.N ) and AT & T ( TN ) rose 2.0 percent and 1.6 percent respectively on bets that will benefit from the plan of the United States government to rescind the network neutrality rules place by the Obama administration.

Raw materials were driven by the plunge into the dollar, with gold at $ 1,290.02 an ounce XAU = having added 0.9 percent overnight.

Oil prices stopped after hitting their peak in more than two years after the closing of one of Canada's largest oil pipelines cut off supplies to the United States. [O / R]

U.S. Crude futures CLc1 fell 12 cents to $ 57.90 a barrel, after jumping 2 percent on Wednesday to the last stepped in mid-2015. Brent LCOc1 crude fell 18 cents to $ 63.14 a barrel.

Editing by Shri Navaratnam

Our standards: The principles of trust of Thomson Reuters.
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