United States dollar hits 7-month high against euro


United States dollar hits 7-month high against euro

Copper continued to suffer, shedding 1.5 percent to $4,612.50 a tonne after hitting a 6-1/2-year low of $4,590 overnight, amid fears of waning demand from China.

The main pointers to a rate rise are robust employment reports earlier this month, as well as the Federal Reserve removing its stance on global growth risks from its October policy statement, as analysts price in a 70% expected chance of a rise. On a quarterly basis, Japan's economic output fell 0.2% in the third quarter versus the quarter before, weaker than forecasts of a 0.1% decline. That signalled a housing market stabilisation that could help re-energise the listless economy.

The dollar also advanced in USA trade, hitting a near three-year high of 123.59 yen from 123.18 yen earlier in the day in Tokyo.

"We're seeing very encouraging signs today, especially the dollar's strength against the yen and the aggressive gains we're seeing in a few cyclical stocks, particularly those with United States exposure", said Stefan Worrall, cash equities manager at Credit Suisse in Tokyo.

Traders are also awaiting the release later in the day of minutes from the USA central bank's October policy meeting, hoping for a few clues about board members' thinking and possible pointers to their plans for next month's gathering.

Federal Reserve officials signaled it "could well be" time to raise short-term rates at the December meeting, according to minutes from the Federal Open Market Committee meeting in October. Shares closed down 0.3% at 22,188.26 points yesterday.

The dollar index was lower at 99.483 after touching 99.745 on Tuesday, its highest since mid-April. Monthly USA consumer prices increased in October after two straight months of declines, putting annual core inflation at 1.9 percent.

The Bloomberg Dollar Spot Index, which tracks the greenback versus 10 peers, rose 0.1 percent to 1,236.34 as of 3:03 p.m.in NY, after reaching its highest level in more than a decade.

The euro added about 0.2 percent to $1.0677, not far from Wednesday's fresh seven-month low of $1.0617, with expectations that the European Central Bank will take fresh monetary easing steps next month continuing to pressure the common currency.

Oil prices rebounded a little after data showed an unexpected stockpile draw for last week, although they remained not far from six-and-a-half-year lows hit in August on persistent concern about a global supply glut.

The market has already priced in a further cut to the deposit rate and expansion of QE, it will now be the details of the monetary policy changes that dictate how much more the currency depreciates in the coming months. At this stage, European Central Bank easing is nearly certain but we still do not know if the Fed will proceed with a rate hike.

The pan-European FTSEurofirst 300 index (.FTEU3), which had risen 2.6 percent on Tuesday, dipped 0.2 percent Wednesday, with industrial gas company Air Liquide (AIRP.PA) off sharply after announcing an expensive-looking acquisition. U.S. crude gained 24 cents to $40.99 a barrel while Brent firmed 37 cents to $44.51.