Dollar flatlines ahead of
Yellen, Draghi at Jackson Hole
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[August 22, 2014]
By Marc Jones
LONDON (Reuters) - The
dollar was steady on Friday after its strongest weekly
run since March and world stocks were near all-time
highs as markets waited for steers from the Federal
Reserve and ECB on diverging policy plans.
European shares <.FTEU3> opened barely changed and heading for their
biggest weekly gain since February, while Asian markets hitched a
ride on another record close for Wall Street to end the week near a
Emerging market stocks were also stronger but investors were
beginning to move to the sidelines ahead of speeches by Fed Chair
Janet Yellen and ECB President Mario Draghi at the annual gathering
of central bankers in Jackson Hole, Wyoming.
Talk will focus on labour markets and economic prospects but traders
will be listening for any clues about the timing of U.S. interest
rate rises and how the ECB plans to tackle the euro zone's
stubbornly low inflation.
"Everyone expects her to make another speech that the labour market
isn't as rosy as the headline employment numbers suggest," Aberdeen
Asset Management portfolio manager Luke Bartholomew said.
"We are all set up for her to be dovish, so the surprise would be if
With that uncertainty in mind, the dollar <.DXY> was hovering just
below its 2014 peak against a basket of major currencies, as the
euro at $1.3280 stayed just away from an 11-month low of $1.3242
struck on Thursday.
TALKING ABOUT JACKSON HOLE
Janet Yellen makes her first trip to Jackson Hole as Fed chair after
U.S. data on Thursday showed home resales rose to a 10-month high in
July, unemployment claims fell and a gauge of future economic
activity grew solidly.
Kansas City Fed President Esther George said the time has come for
higher U.S. rates, though less hawkish San Francisco Fed President
John Williams said the bank should wait until next summer.
Rate hike-sensitive 2-year U.S. government bonds have seen their
yields rise the most since March this week. In contrast, worries
about the euro zone slipping towards deflation and near-zero growth
pinned German 10-year government bond yields firmly below 1 percent
on Friday. [GVD/EUR]
ECB President Mario Draghi is under pressure to use his last
remaining tool -- printing money to buy huge amounts of bonds -- to
tackle near-zero inflation but he is not expected to show any
renewed urgency in that regard when he speaks later.
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"The odds of QE in the near-term are relatively low," Pimco's
European strategist and portfolio manager Myles Bradshaw said. "The
market is thinking more about what will happen in 2015."
MSCI's broadest index of Asia-Pacific shares outside Japan
<.MIAPJ0000PUS> ended within a few points of a 6-1/2 year while the
main emerging market index <.MSCIEF> hit a three-year high.
It is perhaps surprising considering the tumble it took last May and
in January when U.S. rate hike talk was also top of the agenda. But
stocks in China have now risen for the last six weeks and Russia
stocks have been on a rebound for the last two.
In commodities trading, spot gold <XAU=> rose 0.2 percent to
$1,279.90 an ounce, after losing 1.3 percent on Thursday as rate
expectations sent it ploughing through some key support levels to a
U.S. crude <CLc1> was slightly higher at $93.98 a barrel, but still
set to post a fifth straight weekly fall.
The sophistication, wealth and military might of Islamic State
militants represent a major threat to the United States that may
surpass that once posed by al Qaeda, U.S. military leaders said on
Thursday. So far, however, the fighting has had little impact on oil
(Editing by Louise Ireland)
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