Despite a U.S. holiday, the dollar dominated trading on Monday as it headed for a fourth day of declines, weakening against every major currency. The euro’s jump weighed on European stocks, while gold gained.
Bloomberg’s dollar index approached its lowest level in three years as the euro extended gains that have pushed it to the strongest since 2014. The Stoxx Europe 600 Index struggled, ending lower as the common currency provided a headwind to the region’s exporter-heavy gauge. Mexico’s peso was the big outperformer as emerging currencies gained, while the yuan touched a two-year high as the People’s Bank of China raised the currency’s fixing. West Texas oil fluctuated before climbing for a sixth day.
The dollar remains under pressure after capping five straight weeks of declines, even against a backdrop of solid U.S. growth. Traders appear to be more excited by potentially hawkish policy shifts from central banks in Europe and Japan, the improving political outlook in the euro area, and the synchronized nature of global expansion that’s also propelling emerging-market economies and assets.
The common currency -- which already has momentum after last week’s progress toward a German government -- got a further boost as economists polled in a monthly Bloomberg survey bumped up their 2018 outlook for euro-area growth to 2.2 percent. That’s close to the decade-high 2.4 percent pace estimated for last year.
Meanwhile, the German central bank’s decision to include the Chinese yuan in its own reserves was another factor dragging on the dollar. Amid greenback weakness, currencies and equities in developing nations rallied. The peso benefited after reports the U.S. was softening its stance toward Nafta talks.
Currencies
The Bloomberg Dollar Spot Index declined 0.6 percent to the lowest in about three years at 4:05 p.m. New York time.
The euro climbed 0.6 percent to $1.2269, the strongest in more than three years.
The British pound increased 0.5 percent to $1.3798, the strongest since June 2016.
The Japanese yen appreciated 0.5 percent to 110.51 per dollar, hitting the strongest in more than four months with its fifth straight advance.
The Mexican peso jumped 1 percent to 18.8420 per dollar, the best performer among emerging currencies.- Bloomberg -