Dollar Set for Worst Week Since '13; S&P Futures Rise

(Bloomberg) — The dollar weakened, heading for its biggest weekly loss since 2013 versus major peers, while European stocks held recent gains. Oil traded near a six-year low and Treasuries were set for their best week since January.

The Bloomberg Dollar Spot Index dropped 0.2 percent by 8:23 a.m. in London, with the euro heading for a 1.7 percent gain since March 13. China’s yuan pared its biggest weekly rally since 2007. The Stoxx Europe 600 Index was little changed after closing at a 14 1/2-year high on Thursday, and Standard & Poor’s 500 Index futures rose 0.3 percent. The yield on 10-year U.S. notes was little changed, while Italian, Spanish and Portuguese bonds rallied. U.S. oil was at $ 43.66 a barrel, set for a fifth weekly slump.

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The dollar is retreating from its strongest level in at least a decade after the Federal Reserve cut its forecast for U.S. interest rates on Wednesday. Lower energy prices have given central banks more scope to maintain stimulus, fueling a $ 5.3 trillion surge in global equities in the past year. European Union leaders meet in Brussels on Thursday as Greece struggles to meet creditors’ conditions for further aid.

“We’re seeing a bit of profit taking here,” Hartmut Issel, the Singapore-based head of equity, credit and macro for the Asia-Pacific chief investment office at UBS Wealth Management, told Bloomberg TV. “I wouldn’t recommend to lose sight of the bigger picture. Yes, the Fed is currently a bit more dovish than we thought going into the meeting, but we are still talking about a very strong U.S. economy, with a strong labor market.”

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Split Policy

While the Fed assesses the timing of a potential rate increase, policy makers from Australia to Sweden have been reducing borrowing costs as part of a global wave of monetary easing.

The Bloomberg dollar gauge, which tracks the greenback against 10 major peers, has retreated 1.1 percent this week. The euro was 0.2 percent stronger at $ 1.0675, headed for the first weekly climb since the second week of February.

Greece must submit a more concrete reform plan to euro-area authorities so that bailout talks can speed up, European Union leaders said after nearly four hours of talks with Greek Prime Minister Alexis Tsipras in Brussels. The yield on 10-year bonds from the country climbed above 12 percent for the first time since 2013 yesterday.

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The Stoxx 600 was little changed at 400.91, about 1.2 percent from an all-time high struck in 1995. The gauge finished at the highest level since Sept. 7, 2000, on Thursday.

The yuan rose 0.6 percent for the week and swung to a 0.2 percent loss Friday after climbing as much as 0.3 percent, China Foreign Exchange Trade System prices show. It was at 6.2139 to the dollar. The won dropped to 1,122.88 a dollar, trimming its advance in the week.

China Shares

Hong Kong’s Hang Seng Index fell 0.4 percent and a gauge of Chinese companies in the city advanced 0.3 percent. The Shanghai Composite Index added 1 percent after its highest close since May 2008 Thursday. Chinese brokerages surged amid speculation a rebound in trading will boost earnings.

The MSCI All-Country World Index has climbed 2 percent this week, set for its first weekly advance since the end of February. MSCI’s Asia Pacific gauge is up 2.1 percent in the week and a measure of emerging-market shares has advanced 2.4 percent, the most since January.

Australia’s S&P/ASX 200 Index advanced 0.4 percent, while the Kospi index in Seoul was little changed.

Oil Bear

The yield on Italian and Spanish government bonds fell at least two basis points, while German bunds due in a decade paid 0.19 percent. Similar maturity Treasuries yielded 1.96 percent after rates rose five basis points on Thursday.

Yields on Australian bonds due in a decade added four basis points, or 0.04 percentage point, to 2.38 percent after they fell every other day this week.

West Texas Intermediate crude fell 0.7 percent after a 1.6 percent slide Thursday, its seventh drop in eight days. The price settling at $ 42.82 or lower would be 20 percent below this year’s peak for WTI, meeting the common definition of a bear market. U.S. oil, which is down 1.9 percent this week, hasn’t posted a weekly advance since early February.

Brent weakened 0.1 percent to $ 54.22 a barrel in London.

U.S. crude stockpiles rose to the highest level in weekly records from the Energy Department’s statistical arm dating back to August 1982. Output accelerated by 53,000 barrels a day to 9.42 million per day, the fastest pace since at least January 1983.

Gold, Apple

OPEC will maintain its production to keep market share, Kuwait Oil Minister Ali Al-Omair said. Saudi Arabia, the group’s largest producer, won’t interfere in the market, according to Prince Turki Al-Faisal, a former intelligence chief of the kingdom.

Gold for immediate delivery was little changed at $ 1,170.93 an ounce. The precious metal jumped 1.6 percent Wednesday after the Fed statement.

Apple Inc. lost 0.8 percent Thursday, declining for the first time in four days, after the world’s most valuable company joined the Dow Jones Industrial Average. The Dow fell 0.7 percent, while both the Russell 2000 Index of small-cap shares and the Nasdaq 100 Index extended gains.

Fewer than 300,000 Americans filed applications for unemployment benefits for a second week, data in the U.S. Thursday showed, signaling the labor market remains resilient even as the economy shows signs of slowing.

The jobs results are in sync with the assessment of Fed policy makers, who said after their meeting Wednesday that labor-market conditions have improved. Still, the central bank said it won’t raise borrowing costs until employment improves further and it is “reasonably confident” inflation will return to its target.

Fed-funds futures showed a 44 percent chance the central bank will raise its benchmark rate to at least 0.5 percent by September, according to data compiled by Bloomberg. That’s down from 55 percent on Tuesday.

To contact the reporters on this story: Emma O’Brien in Wellington at eobrien6@bloomberg.net; Nick Gentle in Hong Kong at ngentle2@bloomberg.net

To contact the editors responsible for this story: Nick Gentle at ngentle2@bloomberg.net Richard Frost

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