Dollar slide deepens as euro strength saps stocks

Bloomberg

Despite a US 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, edging lower as the common currency provided a headwind to the region’s exporter-heavy gauge. 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 US 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 synchronised 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 towards 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.
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 US was softening its stance towards Nafta talks.
US housing starts probably slipped in December for the first time in three months as frigid winter weather impeded work, forecasts show.
The Stoxx Europe 600 Index fell 0.1 percent as of 4:34 pm London time. The MSCI World Index of developed countries climbed 0.4 percent, reaching the highest on record with its 11th consecutive advance. The MSCI Asia Pacific Index gained 0.6 percent to the highest on record with the largest rise in more than a week. Japan’s Nikkei 225 Stock Average jumped 0.3 percent. The MSCI Emerging Market Index increased 0.2 percent to the highest on record. The UK’s FTSE 100 Index decreased 0.1 percent. Futures on the S&P 500 Index gained 0.2 percent to the highest on record.
The Bloomberg Dollar Spot Index sank 0.6 percent to the lowest in about three years. The euro climbed 0.5 percent to $1.2264, the strongest in more than three years. The British pound increased 0.5 percent to $1.3803, the strongest in about 19 months. The Japanese yen rose 0.5 percent to 110.56 per dollar, hitting the strongest in more than four months with its fifth straight advance. The Mexican peso climbed 1.2 percent to 18.8051 per dollar, the strongest in six weeks on the biggest surge in three months.