Dollar extends rout, at three-year low after Mnuchin remarks; gold jumps
The U.S. dollar extended its recent rout to hit three-year lows and gold rose to its highest level in 1-1/2 years on Wednesday after U.S. Treasury Secretary Steven Mnuchin said he welcomed a weakening in the dollar.
Fears of protectionist trade policies by the United States had already pushed the greenback to a three-year low, and Mnuchin`s remark at the annual Davos summit of business and political leaders pushed it down further.
Adding to the protectionist fears, Commerce Secretary Wilbur Ross, also at the Davos summit, said U.S. trade authorities are investigating whether there is a case for taking action over China`s infringements of intellectual property.
U.S. President Donald Trump, who is scheduled to speak in Davos on Thursday, slapped steep tariffs on imported washing machines and solar panels on Monday.
Mnuchin`s comments provided a fresh trigger for dollar selling and raised questions about whether a weaker U.S. currency could provide a long-term impetus for the economy.
The dollar index <.dxy>, which measures the greenback against a basket of six major currencies, was down 1 percent at 89.198, slipping below 90 for the first time since December 2014. The dollar was down about 1 percent against the yen
"It`s quite significant given that this is the first time in a very long time that a Treasury secretary has spoken against a strong dollar," said Sireen Harajli, FX strategist at Mizuho.
Gold prices rose, hitting their highest level since August 2016, as investors sought insurance against fears of rising inflation. Spot gold
In U.S. stocks, the S&P 500 ended down slightly as Ross` comments fuelled worries of a trade war. Stocks were higher early in the session following another round of upbeat earnings and the dollar`s fall, which tends to be a positive for U.S. multinationals.
Also weighing on the S&P 500, General Electric Co.
The Dow Jones Industrial Average <.dji> rose 41.31 points, or 0.16 percent, to 26,252.12, the S&P 500 <.spx> lost 1.59 points, or 0.06 percent, to 2,837.54, and the Nasdaq Composite <.ixic> dropped 45.23 points, or 0.61 percent, to 7,415.06.
The pan-European FTSEurofirst 300 index <.fteu3> lost 0.51 percent and MSCI`s gauge of stocks across the globe <.miwd00000pus> gained 0.15 percent.
U.S. Treasury debt prices slumped, also after Mnuchin`s comments. U.S. 30-year bond yields, which move inversely to prices, rose to their highest level in more than three months.
In late trading, U.S. 10-year Treasury yields
U.S. 30-year bond yields hit a 3-1/2-month peak of 2.956 percent
Oil rallied, lifted by a record 10th straight weekly decline in U.S. crude inventories.
U.S. West Texas Intermediate futures
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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