Bloomberg.- The dollar pared its weekly loss, benefiting from central bank action in Japan and heightened political risks from Turkey to Mexico. European stocks retreated as UBS Group AG led a decline in banking shares.
The greenback rose against most of its major peers. The yen extended its biggest decline in a week and Japanese bonds gained as the nation’s central bank stepped in to buy debt. The peso fell for a second day as souring relations between Mexico and the U.S. pushed the countries closer to a trade war. The lira touched new lows before a review of Turkey’s credit rating, while gold headed for its longest slump in three months.
With global stocks rising and bond yields buoyed by U.S. President Donald Trump’s reflationary infrastructure-spending plans, currencies are emerging as the favored way for investors to position for country-specific risks. UBS damped a rally in European stocks on Friday by reporting that profitability of its wealth management business declined for a third straight quarter.
“The lesson from 2016 was that political risk plays out in currencies,” said Ben Kumar, a London-based investment manager at Seven Investment Management, which oversees about 10 billion pounds ($12 billion). “Everyone’s looking at the currency markets, regardless of which region you’re focused on. Whether you’re in Britain watching Brexit, France watching Le Pen or the U.S. watching Trump.”
Here are the main moves in markets:
– The Bloomberg Dollar Spot Index rose 0.2 percent as of 10:24 a.m. in London. The measure is down 0.4 percent for the week, headed for a fifth straight weekly decline.
– The pound fell 0.4 percent, paring a 1.3 percent weekly gain. The yen slid 0.4 percent and the euro was little changed.
– The peso dropped 0.1 percent, extending Thursday’s 0.7 percent retreat. Mexico’s president scrapped his trip to Washington after President Trump doubled down on campaign pledges to rewrite the North American Free Trade Agreement and charge his southern neighbor to build a border wall.
– The Turkish lira fell 0.8 percent and is down 2.9 percent for the week.
– The Stoxx Europe 600 fell 0.5 percent following three days of gains that left it still on course for a weekly rise of 1.1 percent.
– UBS slid 2 percent after the bank said clients pulled a net 15.2 billion francs ($15.2 billion) in the final three months of last year
– Futures on the S&P 500 Index retreated less than 0.1 percent. The underlying benchmark slipped 0.1 percent Thursday after rising past 2,300 for the first time, while the Dow Jones Industrial Average extended an all-time high.
– The yield on 10-year U.S. Treasuries was unchanged at 2.51 percent.
– Japanese 10-year yields fell one basis point to 0.07 percent. The BOJ boosted the amount of 5-to-10-year bonds it buys in its outright purchase operations, underscoring a commitment to keep its yield-curve target.
– Gold fell as much as 0.6 percent to $1,181.35 an ounce, the lowest price in more than two weeks. It is headed for a fourth straight loss, which would be the longest slump since October.
– West Texas Intermediate crude fell 0.9 percent to $53.30 a barrel after surging 2 percent Thursday on optimism that OPEC and other oil-producing nations would adhere to their pledged output cuts.
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