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The dollar drops to a one-month low as world stocks post their first weekly gain in eight weeks

Image: Reuters Berita 24 English -  On Friday, global markets were on track for their first weekly rise in eight weeks, while the dollar fel...

Image: Reuters

Berita 24 English -  On Friday, global markets were on track for their first weekly rise in eight weeks, while the dollar fell to one-month lows after the Federal Reserve's minutes hinted it would hold off on rate hikes later this year.

Stocks were buoyed overnight by optimistic profit forecasts from department store operator Macy's Inc and discount brands Dollar General Corp and Dollar Tree.

The minutes from the Fed's May meeting were released on Wednesday, and they confirmed two more 50-basis-point hikes in June and July, but they also hinted at a possible halt later in the year.

"The FOMC (Federal Open Market Committee) minutes have all trickled through," said Giles Coghlan, HYCM's principal currency analyst.

"Investors were relieved that there was no 75-basis-point nudge."

Markets will be watching the April core PCE price index for the United States, which will be released later on Friday, for more clues on whether inflation is heating up, according to Coghlan.

The MSCI world stock index increased by 0.38 percent. It was on track for a 3.2 percent weekly gain and a nearly 6% rebound from two weeks ago's 18-month lows.

After the Dow Jones Industrial Average climbed 1.61 percent, the S&P 500 gained 1.99 percent, and the Nasdaq Composite gained 2.68 percent on Thursday, S&P futures were flat.

European stocks were up 0.18 percent, reaching a 10-day high. The FTSE fell 0.23 percent from its three-week highs the day before.

Alibaba and Baidu reported better-than-expected first-quarter revenue growth, boosting Hong Kong stocks by 2.7 percent. Asian stocks also gained from expectations of improved Sino-US relations and increased Chinese government support.

Secretary of State Antony Blinken stated on Thursday that the US would not stop China from building its economy as long as it followed international standards, which some investors saw as a positive sign for bilateral ties.

The Nikkei 225 index in Japan gained 0.7 percent, mainland blue-chips in China gained 0.2 percent, and Australia's resources-heavy index gained 1.1 percent.

The dollar fell to one-month lows versus a basket of currencies as a result of the shift in attitude, down 3.2 percent from 20-year highs earlier this month. The euro increased by 0.11 percent to a one-month high.

The potential of an EU ban on Russian oil, as well as the oncoming summer driving season in the United States, kept oil prices around a two-month high, with Brent crude on track for its greatest weekly advance in 1-1/2 months.

Crude oil in the United States rose 0.08 percent to $114.20 a barrel. Brent is now trading at $117.73 per barrel, up 0.28 percent. [O/R]

The 10-year Treasury note yield has dropped to 2.7468 percent. It had hit a three-year high of 3.2030 percent earlier this month, owing to concerns that the Fed's quick rate hikes will stifle long-term growth.

The two-year yield, which rises in response to traders' forecasts of increasing Fed funds rates, fell to 2.4678 percent from 2.4888 percent at the end.

"Overall, a significant decompression of stress," ING analysts wrote in a note.

The yield on German 10-year bonds fell to 0.982 percent.

The price of spot gold increased by 0.43 percent to $1857.79 per ounce. 

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