Dollar Drops on Price Data Miss; Pound Hit by BOE: Markets Wrap

Dollar Drops on Price Data Miss; Pound Hit by BOE. The dollar gave up some recent gains on Thursday, extending a decline as data showed U.S. consumer prices rose by less than forecast in April. Stock markets were mixed as traders confronted a range of catalysts from political risks to missiles in the Middle East, while the pound erased an advance after the Bank of England held interest rates.

Ten-year Treasury yields, which have been driving up the greenback and exacting pain on emerging markets, dropped back below 3 percent to push the dollar toward its first retreat in five days. Data showed costs for automobiles and airfares declined, reducing chances that inflation will run significantly above the Federal Reserve’s target in coming months. U.S. equity futures climbed.

Elsewhere, the pound weakened as policymakers at the central bank voted 7-2 to keep rates unchanged in what was interpreted as a more dovish holdthan expected, before paring as the dollar deepened its declines. The Stoxx Europe 600 Index drifted downward as various markets — including in Switzerland, Sweden, and Austria — shut for public holidays. Oil extended its rally in New York.

The inflation miss adds to an unrelenting news flow for investors this week, with tension between Israel and Iran mounting just days after U.S. President Donald Trump roiled the international community with his decision to ditch a nuclear accord with the Islamic Republic. Meanwhile, the stage is setfor a populist government to form in Italy, and traders are rapidly coming to terms with an election upset in Malaysia.

Malaysian markets are closed, though trading in non-deliverable forwards suggested the ringgit will tumble Monday in the wake of the surprise ouster of the country’s ruling party. The 2045-maturity dollar bond also declined.

Developing markets more broadly signaled stability, and the MSCI Emerging Market Index rallied for a fourth day. The New Zealand dollar slid after the central bank left the door open to an interest rate cut as inflation remains contained.

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These are the main moves in markets:

Stocks

• The Stoxx Europe 600 Index dipped 0.2 percent as of 8:35 a.m. New York time, the first retreat in a week.
• Futures on the S&P 500 Index gained 0.2 percent, reaching the highest in more than three weeks on its sixth consecutive advance.
• The MSCI All-Country World Index advanced 0.3 percent to the highest in three weeks.
• The U.K.’s FTSE 100 Index fell less than 0.05 percent, the biggest fall in a week.
• Germany’s DAX Index jumped 0.3 percent to the highest in 14 weeks.
• The MSCI Emerging Market Index jumped 1 percent to the highest in more than a week on the biggest increase in almost two weeks.
• The MSCI Asia Pacific Index jumped 0.7 percent to the highest in three weeks on the largest climb in almost two weeks.

Currencies

• The Bloomberg Dollar Spot Index sank 0.6 percent, the first retreat in a week and the biggest dip in seven weeks.
• The euro climbed 0.5 percent to $1.1909, the first advance in a week and the largest climb in more than six weeks.
• The British pound climbed less than 0.05 percent to $1.3553.
• The Japanese yen advanced 0.3 percent to 109.41 per dollar, the largest gain in a week.

Bonds

• The yield on 10-year Treasuries sank four basis points to 2.96 percent, the biggest tumble in two weeks.
• Germany’s 10-year yield declined two basis points to 0.54 percent, the largest fall in a week.
• Britain’s 10-year yield declined two basis points to 1.457 percent, the biggest fall in a week.

Commodities

• West Texas Intermediate crude climbed 0.6 percent to $71.58 a barrel, the highest in more than three years.
• Copper jumped 1.7 percent to $3.11 a pound, the highest in two weeks on the biggest jump in more than three weeks.
• Gold jumped 0.6 percent to $1,320.99 an ounce, the highest in almost two weeks on the largest climb in almost four weeks.

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