Early trade in NY: dollar weakens broadly

Emerging equities snapped a two-day losing streak to jump 2.3 percent on Thursday and currencies rose against the dollar as the fading prospect of more near-term United States rate rises pushed the greenback to three-month lows.

Dollar weakness, and unconfirmed talk that oil-producing countries in and outside the OPEC group may meet soon to discuss output cuts to help relieve a global supply glut, helped crude prices add to Wednesday’s sharp gains. Oil companies rose more than the rest of the market as the price of crude continued to recover. The dollar continued to fall against other currencies.

“A rebound in crude oil seems to be the main driver as commodity related stocks help… indices hold in positive territory”, said Manoj Ladwa, head of trading at TJM Partners.

Over the past couple of weeks, they have scaled back expectations that the Fed will continue gradually raising interest rates amid signs that the global slowdown in growth is beginning to hurt the US economy.

“This is an emotional, sentiment-driven market and it’s likely to remain tied to oil”, Michael James, managing director of equity trading at Wedbush Securities Inc.in Los Angeles, said by phone. The dollar’s pullback this week has reversed all the yen’s decline against the greenback on Friday when the Bank of Japan introduced negative interest rates to revive inflation, which is stuck near zero.

Britain’s miner-heavy FTSE 100 index rose 1.4 percent.

The U.S. currency fell 0.7 percent against a basket of major currencies on Thursday and is down 3 percent for the week, on pace for its worst week since May 2009. The pan-European FTSEurofirst 300 index rose 0.4 percent while the STOXX Europe 600 Basic Resources Index gained 3.4 percent and oil and gas index 2.2 percent.

Meanwhile, the dollar sank after New York Fed President William Dudley told financial news agency MNI that the USA central bank would have to take into account tight global financial conditions when considering further rate hikes.

The Dow ended Wednesday up 1.13 percent, while the S&P 500 added 0.5 percent and the Nasdaq Composite eased 0.28 percent.

The won strengthened as much as 1.6 percent to 1,199.89 a dollar before closing 1.4 percent higher at 1,202.06, data compiled by Bloomberg show.

The euro EURUSD, -0.1801% traded at $1.1108 late Wednesday in NY, compared with $1.0925 late Tuesday in NY. “There’s a disconnect where the Fed says it’s four hikes while the market says it’s like 0.7 hike this year – someone is wrong”.

Japanese bond yields also kept falling as the market digests the impact of the BOJ’s decision to charge interest on a portion of excess reserves, with the 10-year JGB yield hitting a record low of 0.045 percent. The dollar index fell half a percent.

Brent futures LCOc1 settled up $2.32, or 7.1 percent, at $35.04 a barrel, after rising as high as $35.11.