Global Markets: Dollar hits three-week high, gold sinks to year low

The U.S. dollar hit a three-week high on Wednesday against a basket of major currencies in the wake of an upbeat view of the economy by the U.S. Federal Reserve, while oil prices resumed a recent pullback and gold slumped to a year low.

A gauge of global stock markets hovered at a month high while Wall Street traded near a five-month high as investors digested another significant day of corporate earnings.

The dollar index, which measures the greenback against a basket of six currencies, rose 0.18 percent, to 95.113 after rising as high 95.407. The euro was down 0.13 percent to $1.1644.

Demand increased after upbeat comments from Federal Reserve Chairman Jerome Powell about the U.S. economy in congressional testimony on Tuesday, a message he reiterated on Wednesday before a U.S. House panel.

“Strengthening economic growth and a confident Fed is helping to support the dollar,” said Alan Gayle, president of Via Nova Investment Management LLC in Fredericksburg, Virginia.

"Higher short-term interest rates make the dollar more attractive relative to other currencies."

On Wall Street, the Dow Jones Industrial Average rose 57.03 points, or 0.23 percent, to 25,176.92, the S&P 500 gained 2.19 points, or 0.08 percent, to 2,811.74 and the Nasdaq Composite dropped 5.72 points, or 0.07 percent, to 7,849.39.

Morgan Stanley shares rose 2.8 percent after the bank`s better-than-expected profit.

The pan-European FTSEurofirst 300 index rose 0.60 percent, as shares of Swiss drugmaker Novartis and Sweden`s Ericsson gained after their reports.

MSCI`s gauge of stocks across the globe gained 0.08 percent, and touched its highest point in a month.

Benchmark U.S. 10-year notes last fell 1/32 in price to yield 2.8637 percent, from 2.862 percent late on Tuesday. The U.S. yield curve remained near its flattest in nearly 11 years.

Oil benchmark Brent crude hit a three-month low after government data showed a rise in U.S. crude inventories and oil production, which highlighted increasing global supply and concerns over weak demand.

U.S. crude fell 0.29 percent to $67.88 per barrel and Brent was last at $71.89, down 0.37 percent.

Gold, which is regarded as a hedge against inflation, extended its downtrend and sank to its lowest in a year on a buoyant dollar and falling oil prices.

"In this environment where we also see oil prices falling, and so less concern from investors about rising inflation, that`s another negative for the gold price," said Jens Pedersen, senior analyst at Danske Bank in Copenhagen.

Spot gold was down 0.1 percent at $1,226.23 an ounce.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)