Dollar advances as traders eye quicker rate hike
The dollar moved higher Wednesday as data showed US inflation accelerating and as investors awaited minutes of the last Federal Reserve policy meeting.
Oil prices rose, a day after the United States and a handful of other petroleum consuming nations dipped into their strategic reserves in an attempt to blunt rising prices.
"The dollar has extended its gains further and is set to end higher for the fifth consecutive week, supported by rising yields amid faster tapering expectations, stronger data and troubles for the eurozone with surging Covid cases," said ThinkMarkets analyst Fawad Razaqzada.
Recent market movements suggest that the Fed could taper, or wind down, its bond-buying programme quicker than first flagged and hike US interest rates next year as the economy recovers and inflation surges.
Prices across the United States rose by five percent last month compared to October 2020 as the wave of inflation accelerated, the government reported Wednesday.
Data also showed that initial claims for jobless benefits falling to 199,000 last week, a level not only below the Covid-19 pandemic-caused mass layoffs, but also the lowest reading since November 1969.
"Today's economic numbers also serve to reinforce the recent narrative that the Federal Reserve is behind the curve when it comes to paring back stimulus, which in turn is pushing the US dollar higher," said market analyst Michael Hewson at CMC Markets.
The New Zealand central bank on Wednesday lifted its rates for a second successive month, joining an increasing number of countries hiking interest rates.
US stocks were mixed in late morning trade, with the Dow down 0.1 percent.
Crude prices added to gains made Tuesday when the move to tap strategic petroleum stockpiles by the United States and other nations was less than expected.
A recent surge in oil prices has added to concerns that inflation -- already at multi-year highs -- will continue to rise, putting further pressure on banks to scale back the easy money policies put in place at the start of the pandemic and crucial to an 18-month rally for stock markets.
The head of the International Energy Agency called on OPEC to take "necessary steps" to lower oil prices at its next meeting.
Europe lockdown fear
Investors are also increasingly worried about soaring Covid cases in Europe.
"European markets have seen another mixed session with the DAX coming under pressure over concerns that the new German government, under new Chancellor Olaf Scholz, could be on the cusp of implementing another full-scale lockdown, in an attempt to stem the rise in hospitalisations which are rising sharply," said Hewson.
The DAX ended the day 0.4 percent lower after a centre-left-led alliance of parties announced a deal to form the next government, putting the Social Democrats (SPD) in charge for the first time in 16 years.
The European Union health agency Wednesday called on member states to "urgently" introduce anti-Covid measures to reduce the potentially "very high" burden the disease will have in December and January.
The director of the European Centre for Disease Prevention and Control, Andrea Ammon, recommended Covid booster shots for all adults over the age of 18.
Key figures around 1630 GMT
New York - Dow: DOWN 0.1 percent at 35,765.98 points
EURO STOXX 50: DOWN less than 0.1 percent at 4,281.44
London - FTSE 100: UP 0.3 percent at 7,286.32 (close)
Frankfurt - DAX: DOWN 0.4 percent at 15,878.39 (close)
Paris - CAC 40: DOWN less than 0.1 percent at 7,042.23 (close)
Tokyo - Nikkei 225: DOWN 1.6 percent at 29,302.66 (close)
Hong Kong - Hang Seng Index: UP 0.1 percent at 24,685.50 (close)
Shanghai - Composite: UP 0.1 percent at 3,592.70 (close)
Euro/dollar: DOWN at $1.1196 from $1.1251 at 2230 GMT
Euro/pound: DOWN at 83.99 pence from 84.03 pence
Pound/dollar: DOWN at $1.3330 from $1.3381
Dollar/yen: UP at 115.38 yen from 115.11 yen
Brent North Sea crude: UP 0.5 percent at $82.71 per barrel
West Texas Intermediate: UP 0.4 percent at $78.82 per barrel