Stocks rise on tame inflation outlook, dollar eases

Marco Green
March 14, 2019

An unexpectedly weak USA inflation reading bolstered most shares on speculation the Fed can hold as the economy finds its footing.

The dollar index fell 0.47 percent, with the euro up 0.4 percent to $1.1331.

The euro declined 0.2 percent to $1.1309, the first retreat in a week.

The U.K. House of Commons votes Tuesday on May's revised Brexit deal, just weeks before Britain is scheduled to leave the EU. U.K. lawmakers have rejected the idea of tearing the country out of the European Union with no agreement, and U.K. Prime Minister Theresa May is said to be planning to seek an extension to the March 29 Brexit deadline lasting about two months. The pound slumped and United Kingdom bonds pared a drop after the chances lawmakers approving a Brexit deal lessened.

The MSCI Emerging Market Index declined 0.1 percent.

US producer prices barely edged higher in February to mark the smallest annual increase since June 2017, in the latest sign of benign inflation that supports the Federal Reserve's wait-and-see approach to future interest rate hikes.

The price of oil, one of Canada's major exports, rose as US crude inventories unexpectedly fell and an official forecast of crude oil supply growth from the world's top producer was revised lower.At (2023 GMT), the Canadian dollar was trading 0.5 percent higher at 1.3292 to the greenback. Immediate resistance can be seen at 1.3300 (Psychological Level), an upside break can trigger rise towards 1.3365 (61.8% retracement level).On the downside, immediate support is seen at 1.3273 (21 DMA), a break below could take the pair towards 1.3264 (50 DMA). After a positive start to the week, investors are in a cautious mood as they digest soft data from Japan and Australia, as well as the ongoing Brexit drama and a warning from the top American trade negotiator that tariffs on Chinese goods may not be rolled back. The pound was last up 1.39 percent at $1.326 after a roller-coaster ride this week in which its price has moved within a range of 3-1/2 cents against the dollar. Tepid inflation and disappointing producer price data this week support the Fed's stance of keeping interest rates on hold, denting the dollar.

The euro was a touch lower at $1.1283 after rising 0.4 percent the previous day as the greenback sagged on the lacklustre US inflation data.

Sterling extended its advance for the week and gilts fell as United Kingdom lawmakers prepare to vote on whether to tear the country out of the European Union with no agreement, or give themselves the chance to delay Brexit in the hope of securing better terms.

The dollar index, a gauge of the currency's strength against six major counterparts, was up 0.1 percent at 96.633.

In late NY trading, the euro was up to 1.1329 USA dollars from 1.1296 dollars in the previous session, and the British pound rose to 1.3217 dollars from 1.3084 dollars in the previous session.

Benchmark 10-year U.S. Treasury notes fell 3/32 in price to yield 2.6141 percent.

Britain's 10-year yield advanced three basis points to 1.227 percent, the highest in more than a week.

Asian shares barely budged on Thursday as investors reacted cautiously to mixed data from China, while the pound hovered near nine-month highs as the risk of a no-deal Brexit receded following a late-night vote.

A trader shows USA dollar notes at a currency exchange booth in Peshawar, Pakistan December 3, 2018. Crude oil climbed after Saudi Arabia was said to extend deep supply cuts.

Other reports by Click Lancashire

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