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Market round-up: Robust US data helps reverse dollar slide

LiveMint logoLiveMint 18-05-2017 Livemint

The dollar reversed early losses against a basket of major currencies on Thursday after stronger-than-expected US economic data put the focus back on a widely anticipated increase in overnight interest rates by the Federal Reserve. The Swiss franc and Japanese yen, currencies considered safe- haven investments during times of uncertainty, surrendered gains against the greenback after the release of US initial jobless claims and the Philadelphia Federal Reserve’s Business Index. The dollar also touched a session high against the euro. The number of Americans applying for jobless benefits fell to a 28-year low and the Philly Fed’s business index came in at double economists’ expectations. The yen, which saw its biggest daily gain against the dollar since July on Wednesday, had touched a more than three week high. The dollar was last up 0.3% to 111.15 yen. The euro fell 0.45% against the dollar to $1.1105. Reuters

Brazil markets sink, triggering circuit breaker

Brazil’s real, stocks and bonds sank as a fresh political crisis ensnared President Michel Temer and threatened to derail a reform agenda that had helped restore confidence in the South American nation.The Ibovespa slid 10% before trading was halted, and futures on the real fell 6%—also triggering a circuit breaker. Oil producer Petroleo Brasileiro SA and lender Banco do Brasil SA plunged at least 18%. Bond risk as measured by five-year credit default swaps soared more than 60 basis points, the highest since January. One of the country’s largest newspapers reported on Wednesday evening that a secret recording exists of Temer approving a payment to Eduardo Cunha, the mastermind behind last year’s impeachment of former president Dilma Rousseff. The presidential press office vehemently denied the allegations. Bloomberg

VIX surges most since last June

As the confusion surrounding Trump threatens to derail the policy agenda that helped push global equities to records as recently as Tuesday, a gauge of US stock volatility surged the most since the UK voted to leave the European Union last June. Many of the trades sparked by the president’s November election have now reversed, with the dollar all but erasing its post-election rally. “The market will revert to much higher volatility and this could be the start of it,” said Richard Haworth, chief investment officer of 36 South Capital Advisors, a London-based hedge fund which bets on rising price swings. Bloomberg

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