Dollar slides as Irma seen as threat to Fed rate hikes

AFP . New York | Update:

DollarThe dollar continued its slide against the euro and other major currencies Friday, while oil prices fell sharply as the US faced off against another major hurricane.

The greenback tumbled to its lowest value against the euro since the start of 2015 as Florida’s highways were jammed with evacuees fleeing as Hurricane Irma roared toward the Sunshine State after killing at least 17 people across the Caribbean and devastating whole islands.

Besides the loss of life and property, one casualty of a direct hit to Florida population centers could be another Federal Reserve interest rate hike in 2017.

“Forecasters are becoming concerned that the center of the storm could move straight up the Florida peninsula putting both Miami and Orlando within its path,” said Boris Schlossberg of BK Asset Management.

“If that turns out to be the case the property damage could be in the tens of billions of dollars and would force US monetary policy makers to maintain an accommodative policy in order to help three top-20 US metropolitan areas rebuild.”

The dollar wasn’t the only asset to plummet. Oil prices also pulled back sharply, with the US benchmark West Texas Intermediate sagging more than three percent to $47.48 per barrel on worries the storm will dent demand in the affected hurricane region.

Gold meanwhile hit a year-high at $1,357.64 an ounce as traders continued to pile into so-called haven investments, including also the yen and Swiss franc, as jitters over North Korea persist.

In contrast to the dollar, traders are becoming more bullish on the euro after European Central Bank chief Mario Draghi signaled the bank planned to announce a policy shift on stimulus next month.

Stocks markets, for their part, were mostly mixed to slightly lower. In New York, the Nasdaq was the biggest loser, shedding 0.6 per cent, with giants such as Apple, Facebook and Google-parent Alphabet all losing more than one percent.

“With this Irma storm bearing down on Florida, it is creating a lot of near term uncertainty,” said Jack Ablin, chief investment officer at BMO Private Bank.

One of the biggest losers in the US was credit reporting agency Equifax, which sank 13.7 per cent after it disclosed that it suffered a hack that affected as many as 143 million US customers, nearly half the country’s population.

Key figures around 2115 GMT

Euro/dollar: UP at $1.2030 from $1.2022

Pound/dollar: UP at $1.3196 from $1.3100

Dollar/yen: DOWN at 107.83 yen from 108.43 yen

New York - DOW: UP 0.1 per cent at 21,797.79 (close)

New York - S&P 500: DOWN 0.2 per cent at 2,461.43 (close)

New York - Nasdaq: DOWN 0.6 per cent at 6,360.19 (close)

London - FTSE 100: DOWN 0.3 per cent at 7,377.60 (close)

Frankfurt - DAX 30: UP 0.1 per cent at 12,303.98 (close)

Paris - CAC 40: FLAT at 5,113.49 (close)

EURO STOXX 50: FLAT at 3,449.08 (close)

Tokyo - Nikkei 225: DOWN 0.6 per cent at 19,274.82 (close)

Seoul - Kospi: DOWN 0.1 per cent at 2,343.72 (close)

Hong Kong - Hang Seng: UP 0.5 per cent at 27,668.47 (close)

Shanghai - Composite: FLAT at 3,365.24 (close)

Oil - Brent North Sea: DOWN 71 cents at $53.78 per barrel

Oil - West Texas Intermediate: DOWN $1.61 at $47.48 per barrel

   
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