Dollar Weakens on Fed Outlook as Emerging-Market Shares Advance 

• Yen breaks 100 after Fed minutes as jobs data boosts Aussie
• Mongolia’s tugrik stabilizes after interest rate hiked to 15%

Emerging-market shares rallied with European stock index futures and the dollar fell versus all of its major peers after minutes of the Federal Reserve’s last meeting damped prospects for a U.S. interest-rate hike.

The MSCI Emerging Markets Index was set for its best close in a year as corporate earnings spurred gains in Hong Kong, while Japanese equities fell as the yen strengthened beyond 100 versus the greenback. The Bloomberg Dollar Spot Index sank to a three-month low after the Fed record showed officials saw little risk of a sharp uptick in inflation, helping push odds of a rate increase this year back below 50 percent. Australia’s dollar jumped after better-than-expected jobs data. Crude traded near $47 a barrel in New York after the longest run of gains in a year.

Bets that central banks in the world’s biggest economies will remain accommodative amid uneven growth propelled global equities to a one-year high this month and sent the dollar tumbling. The Fed minutes struck a more dovish tone when compared with comments this week from New York Fed chief William Dudley, who flagged the prospect of a rate hike as soon as next month. Dudley will hold a press briefing on Thursday in New York and his San Francisco counterpart, John Williams, is also due to speak.

“The message appears to be that as much as a September hike is a possibility, the Fed is unlikely to move until there is a consensus on the outlook for growth, hiring and inflation,” said Rodrigo Catril, a currency strategist at National Australia Bank Ltd. in Sydney. “Recent data would therefore suggest a hike is not imminent.”

France’s unemployment rate dropped to its lowest level in almost four years, data showed Thursday, and the European Central Bank may shed light on its policy outlook when the minutes of its July monetary policy meeting are released. Euro-area inflation figures are also due, while the U.K. will report on retail sales and the U.S. has a weekly update on jobless claims numbers coming. Wal-Mart Stores Inc. is among major U.S. companies announcing earnings.

Stocks

Futures on the Euro Stoxx 50 Index rose 0.6 percent as of 7:15 a.m. London time. Nestle SA reported the slowest first-half sales growth since 2009 as the world’s biggest food company struggled to raise prices. Rabobank Groep, the second-largest Dutch bank by assets, said first-half profit fell 39 percent.

The MSCI Emerging Markets Index rallied 0.8 percent as benchmarks in Hong Kong, Indonesia and Thailand advanced more than 1 percent. Japan’s Topix index dropped 1.6 percent, while the Philippine Stock Exchange Index erased losses after the governmentreported better-than-expected economic growth for the second quarter.

The Hang Seng Index climbed 1.2 percent, with all of its three biggest gainers rallying in the wake of earnings. Tencent Holdings Ltd., which has the biggest weighting on the gauge, surged as much as 6.2 percent to an all-time high after reporting a 47 percent jump in quarterly profit that beat analysts’ estimates.

“There’s a euphoria,” said Francis Lun, chief executive officer at Geo Securities Ltd. in Hong Kong. “Given the economic conditions, investors were not expecting too much from earnings.”

Treasury Wine Estates Ltd., which owns Penfolds and is the world’s largest listed vintner, jumped as much as 14 percent in Sydney after reporting increases in annual sales and earnings. Samsung Electronics Co., the world’s largest maker of phones and memory chips, rose to an all-time high in Seoul.

S&P 500 Index futures gained 0.1 percent after the U.S. benchmark ended the last session within 0.4 percent of a record high.

Currencies

Bloomberg’s dollar gauge fell 0.4 percent. It closed 0.2 percent higher on Wednesday, having been up as much as 0.5 percent ahead of the Fed minutes’ publication.

“The minutes struck a cautious note against any rushed rate hike decision,” said Mitsushige Akino, a Tokyo-based executive officer at Ichiyoshi Asset Management Co. “The odds are for a December hike, rather than a September one, and the yen looks set to extend gains from here.”

The yen strengthened for a fifth day, gaining 0.4 percent to 99.88 per dollar. South Africa’s rand gained 0.9 percent, leading gains among the currencies of commodity-exporting nations. The Aussie climbed 0.8 percent after a report showed Australia’s unemployment rate unexpectedly fell to 5.7 percent in July.

Mongolia’s tugrik was little changed near a record low, after sliding on each of the last 23 trading days. The nation’s central bank raised its benchmark interest rate to 15 percent from 10.5 percent to support the currency, while the government announced salary cuts for executives and management-level staff at state-owned enterprises in a bid to prevent a default.

Commodities

Crude oil added 0.1 percent to $46.84 a barrel in New York, building on a five-day rally. It gained 0.5 percent on Wednesday as data showed U.S. crude and gasoline stockpiles declined, easing an overhang of supplies that are at the highest seasonal level in at least two decades. OPEC is on course to agree an output-freeze deal because its biggest members are already pumping flat-out, Chakib Khelil, the group’s former president,said in a Bloomberg interview.

“The decline in crude inventories and the much bigger drop in gasoline stockpiles is clearly a positive,” said Angus Nicholson, a market analyst in Melbourne at IG Ltd. “There has been a lot of momentum in the oil price, fueled by some jawboning with regards to the possibility of a supply freeze deal.”

Gold rose 0.3 percent, climbing for a fourth day amid the dollar’s retreat. Silver and platinum rose more than 0.5 percent.

Copper added 0.6 percent in London and aluminum traded near a 13-month high. The World Bureau of Metal Statistics reported late Wednesday that all six industrial metals included in the London Metal Exchange’s LMEX Index saw shortages between January and June, with the aluminum market’s shortfall widening to 479,000 metric tons in the first half, from 331,000 tons in all of 2015.

Bonds

U.S. Treasuries due in a decade advanced for a second day, pushing their yield down by one basis point to 1.54 percent. Morgan Stanley recommends buying five-year notes, saying the absence of inflationary pressures in the world’s biggest economy will push the probability of a Fed rate increase this year to 30 percent in coming weeks. The likelihood was 49 percent on Wednesday, according to Bloomberg calculations based on Fed fund futures.

The yield on Australia’s 10-year bonds fell three basis points to 1.88 percent, having been as low as 1.86 percent prior to the employment data.

Source: Bloomberg

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