The US dollar plummeted to levels not seen in over two years. The weakness in the dollar follows a tumultuous week with the same key drivers ongoing natural disasters and issues on the geopolitical and economic policy front.
At close on Friday, caution defined the markets. Investors scanned the horizon and saw potential hulking threats with Hurricane Irma still on course to hit Florida directly over the weekend. The category 5 tropical storm has left a trail of destruction in the Caribbean. Consecutive hurricanes have roiled markets as investors seek traditional safe havens into treasuries and gold.
Meanwhile on the geopolitical front, North Korea continues issuing bellicose statements and news that South Korea is anticipating another potential intercontinental ballistic missile launch as soon as Saturday. The Dow was up 13 points or +0.06% while the S&P 500 fell 3 points or -0.15% and Nasdaq also fell 37 points or -0.59%. Individual stocks lagging on the big board were Apple which slid -1.63% and Wal-Mart Stores down -1.49%. On the S&P 500, the biggest percentage losers were Equifax and Kroger down -13.66% and -7.51% respectively.
- Dow 21,797.79 +0.06%
- S&P 500 2,461.43 -0.15%
- Nasdaq 6,360.19 -0.59%
- Russell 2000 1,399.43 +0.05%
- NYSE Composite 11,887.96 +0.07%
- Gold 1,351.4 +0.09%
- Oil WTI $47.57 -3.12%
- 10-Year Treasury 2.05 +0.01%
Dollar’s wheel of fortune tilts
The greenback’s troubles dominated headlines on Friday. Its continued weakness is attributed to lingering doubts of an interest rate hike this year, as Fed policymakers continue to voice concerns about low inflation.
While the dollar is plunging there is corresponding strength in other currencies. The European Central Bank’s announcement on Thursday that it would hold rates and signaled that discussions to taper its stimulus programme in October drove the euro higher. A stronger euro traded in a range from $1.2017 to 1.2093 on Friday at close it gained +0.11% to $1.20. The dollar index (measured against a basket of six currencies) fell -0.22% at 91.29.
“The market continues to refuse to price additional rate hikes from the Fed, a phenomenon we have termed zombification. This is not about whether the FOMC will raise rates in December but a broader question of what will happen beyond,” George Saravelos, Strategist with Deutsche Bank in London said on Pound Sterling Live.