Dollar hits 4-year high, hurts equity outlook
Dollar index, which measures the greenback against a basket of major currencies, rose to a four-year high of 85.485 before paring some gains, up 0.21% at 85.217
 "Dollar hits 4-year high, hurts equity outlook")
The dollar hit a four-year high as the yield difference between US Treasuries and German Bunds widened to the highest in nearly 15 years on Thursday, while global equity markets fell sharply as the stronger dollar pointed to potential earnings losses.
Weak European economic data on Wednesday also helped push the euro lower, while the strong dollar knocked down oil, gold and other commodity prices on Thursday.
The dollar index, which measures the greenback against a basket of major currencies, rose to a four-year high of 85.485 before paring some gains, up 0.21 per cent at 85.217.
The euro fell as low as $1.26955 on trading platform EBS, its lowest since November 2012, as the yield gap is a key driver of exchange rates.
Selling in the euro, which was last off 0.31 per cent against the dollar at $1.2740, quickened after the shared currency sank below the $1.2750 level, according to Boris Schlossberg, managing director at BK Asset Management in New York.
"The sentiment toward the unit remains extremely negative as markets are beginning to appreciate the divergence between US and European monetary policies," he told clients in a note.
Weak European economic data on Wednesday also helped push the euro lower, while the strong dollar knocked down oil, gold and other commodity prices on Thursday.
The dollar index, which measures the greenback against a basket of major currencies, rose to a four-year high of 85.485 before paring some gains, up 0.21 per cent at 85.217.
The euro fell as low as $1.26955 on trading platform EBS, its lowest since November 2012, as the yield gap is a key driver of exchange rates.
Selling in the euro, which was last off 0.31 per cent against the dollar at $1.2740, quickened after the shared currency sank below the $1.2750 level, according to Boris Schlossberg, managing director at BK Asset Management in New York.
"The sentiment toward the unit remains extremely negative as markets are beginning to appreciate the divergence between US and European monetary policies," he told clients in a note.
The spread between benchmark US and German 10-year debt was 156 basis points, within touching distance of recent 15-year highs of 158 basis points.
Ten-year German Bund yields fell to 0.973 per cent, while 10-year US Treasury yields slipped to 2.5203 as the price rose 13/32.
A strong dollar can hurt earnings from abroad for US multinationals, as well as industrials and companies in basic materials, said Keith Bliss, senior vice-president at Cuttone & Co in New York.
"A stronger dollar, if it moves too rapidly, is typically a pattern that is bad for US equities," Bliss said. "The commodity guys are going to be a little weaker in this market; it is clearly going to have an impact on their core product, on what they sell, since they are all denominated in dollars." Stocks on Wall Street fell more than 1 per cent, and pushed MSCI's all-country index down 1.07 per cent to 419.18. The FTSEurofirst 300 index of top European shares retreated, falling 1.06 per cent at 1,371.05.
The Dow Jones industrial average was down 195.48 points, or 1.14 per cent, at 17,014.58. The Standard & Poor's 500 Index was down 23.65 points, or 1.18 per cent, at 1,974.65. The Nasdaq Composite Index was down 74.21 points, or 1.63 per cent, at 4,481.01.
Brent crude fell further under $97 a barrel as abundant supply and the strong dollar largely outweighed worries about West Asia conflict.
Brent fell 46 cents to $96.49 a barrel before recovering to trade at $96.85. US crude was up 32 cents at $93.10 a barrel.
Three-month copper on the London Metal Exchange retreated 0.67 per cent to $6,697 a tonne, and the 19-commodity Thomson Reuters/Core Commodity CRB Index fell 0.9 per cent.
Ten-year German Bund yields fell to 0.973 per cent, while 10-year US Treasury yields slipped to 2.5203 as the price rose 13/32.
A strong dollar can hurt earnings from abroad for US multinationals, as well as industrials and companies in basic materials, said Keith Bliss, senior vice-president at Cuttone & Co in New York.
"A stronger dollar, if it moves too rapidly, is typically a pattern that is bad for US equities," Bliss said. "The commodity guys are going to be a little weaker in this market; it is clearly going to have an impact on their core product, on what they sell, since they are all denominated in dollars." Stocks on Wall Street fell more than 1 per cent, and pushed MSCI's all-country index down 1.07 per cent to 419.18. The FTSEurofirst 300 index of top European shares retreated, falling 1.06 per cent at 1,371.05.
The Dow Jones industrial average was down 195.48 points, or 1.14 per cent, at 17,014.58. The Standard & Poor's 500 Index was down 23.65 points, or 1.18 per cent, at 1,974.65. The Nasdaq Composite Index was down 74.21 points, or 1.63 per cent, at 4,481.01.
Brent crude fell further under $97 a barrel as abundant supply and the strong dollar largely outweighed worries about West Asia conflict.
Brent fell 46 cents to $96.49 a barrel before recovering to trade at $96.85. US crude was up 32 cents at $93.10 a barrel.
Three-month copper on the London Metal Exchange retreated 0.67 per cent to $6,697 a tonne, and the 19-commodity Thomson Reuters/Core Commodity CRB Index fell 0.9 per cent.