Dollar on Positive Path for 2018 before Fed Meeting


The dollar stormed into positive territory for the year on Tuesday, May 1, and bond yields were creeping higher again, as rising oil prices fueled bets that the Federal Reserve will flag more U.S. rate hikes this week.

May Day holidays in many centers across Asia and Europe meant trading was sparser than usual, though there was more than enough news flow to keep those that were open occupied.

The mood at the margins was upbeat after U.S. President Donald Trump extended steel and aluminum tariff exemptions for Europe, Canada and Mexico for another month.

It was the dollar though making the running as it turned positive for the year before a two-day Fed meeting expected to pave the way for another two or even three U.S. rate hikes this year.

London’s greenback bulls took advantage of the reduced trader presence in the rest of Europe to push it to almost $1.20 per euro and make good ground against the Swiss franc and the data-damaged pound.

Dollar was nudging up at 2.96 percent on Tuesday, which also left the gap between U.S. and German 10-year benchmark bond yields just off its widest level in nearly three decades.

For Europe’s stocks followers, only London’s FTSE and Denmark’s bourse were open.

They were both higher, thanks to the boost to exporters of lower domestic currencies and relief that Trump had postponed steel and aluminum tariffs on the EU, Canada and Mexico and given permanent exemptions to several other allies.

U.S. stock futures were steady and in Asia, Japan’s Nikkei closed up 0.2 percent while Australian shares hit seven-week highs as its monster metals sector breathed easier.

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