Dollar Shines, U.S. Yields Surge On Upbeat U.S. Data
Published 2014-07-31 06:54:22| Amwal Al Ghad English
The dollar stayed strong and U.S. bond yields held firm on Thursday after data showed solid U.S. economic growth, even as the Federal Reserve repeated its message that it is in no hurry to raise interest rates. While the prospect of a solid U.S. recovery underpinned equities, many Asian shares slipped on profit-taking after making hefty gains since the middle of this month.MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.3 percent but held still not far from 6 1/2-year high hit on Wednesday. The Nikkei average rose 0.3 percent while Australian shares inched up to hit six-year highs. European shares are expected to open slightly firmer, with France's CAC40 seen rising up to 0.3 percent and Britain's FTSE 0.1 percent.
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Get To Know
Born in 1954 in the coastal city of Balteem in the Delta governorate of Kafr El-Sheikh to a working-class family, Hamdeen Sabahi was the youngest of 11 children.He studied mass communication at Cairo University. A politically-active student, he was elected head of the Cairo University Student Union in 1975 and served as deputy chair of the General Federation of Students from 1975 to 1977. He established the political Nasserist Thought Club to mobilise on Cairo University’s campus in defence of the principles of Gamal Abdel-Nasser's 1952 revolution in a context of later rapprochement efforts with the West by then-president Anwar El-Sadat. As well as being a political activist, Sabahi worked as a journalist. In 1977, following the January popular uprising against Sadat over skyrocketing food prices, Sabahi publicly confronted the president in a televised meeting in which he spoke on behalf of the Cairo University Student Union. As a result, Sabahi was prohibited from working as a journalist in the state media sector for several years. Sabahi’s membership in the Arab Democratic Nasserist Party was suspended in 1994 due to internal conflicts between the party's young cadres – including Sabahi – and the party's old guard of personalities who had been close to late president Nasser.
The U.S. dollar was on track for its biggest daily loss against a basket of major currencies in over three weeks on Friday after the U.S. government's July employment report showed no signs of wage inflation, supporting a continued dovish stance from the Federal Reserve. The Labor Department said U.S. nonfarm payrolls increased 209,000 last month, below economists' expectations for an increase of 233,000, while the unemployment rate unexpectedly rose to 6.2 percent. Data for May and June were revised to show a total of 15,000 more jobs created than previously reported. Analysts said the increase in the labor force participation rate, to 62.9 percent from 62.8 percent, and roughly flat average hourly earnings growth were critical because they indicated a lack of wage inflation, which the Fed is closely monitoring as a potential signal of reduced slack in the economy. Increasing wage inflation could prompt the central bank to raise rates. "Low wage growth may buy the Fed a bit more time," said Jens Nordvig, head of G10 FX strategy at Nomura Securities International. "It is the one good excuse they have left for not normalizing" monetary policy, he said. He added, however, that the dollar's "underlying strengthening trend" was "hardly in question." The U.S. dollar index .DXY was last down 0.16 percent at 81.327, retreating further from Thursday's 10-1/2-month high of 81.573. The index, however, posted its third straight weekly gain, largely on the view that recovering U.S. economic growth would pave the way for a more hawkish Fed. The dollar had little reaction to The Institute for Supply Management reporting its index of national factory activity rose to 57.1 in July, holding its losses. The ISM reading was the highest since April 2011. Consumer sentiment for July, meanwhile, was slightly below expectations. Thomson Reuters/University of Michigan's final July reading on the overall index on consumer sentiment came in at 81.8, a touch below the 82.0 estimate. "None of these numbers matter because Janet Yellen appears to not look at anything other than wage inflation, and she is looking at the wage inflation numbers that say everything is fine," said Axel Merk, president and chief investment officer of Palo Alto, California-based Merk Investments. The euro was last up 0.28 percent against the dollar at $1.3426 after hitting a session high of $1.3444. Against the yen, the dollar was last down 0.21 percent at 102.57 yen after hitting a low of 102.35 yen, and was down 0.31 percent against the Swiss franc at 0.9057 franc after hitting a session low of 0.9042 franc. The yield on benchmark 10-year U.S. Treasury notes dipped to 2.51 percent, from 2.56 percent late Thursday.
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